Holding

Section 126(6) of the Multi‑State Co‑operative Societies Act, 2002 saves pending execution proceedings under the 1984 Act, rendering the award and sale certificate valid and not subject to set‑aside under the Arbitration and Conciliation Act, 1996.

Summary

The appellant, a successful purchaser at a sealed‑tender sale, sought to enforce a sale certificate issued after the execution of an award under the Multi‑State Co‑operative Societies Act, 1984. The respondents, borrowers, had defaulted on a loan and the property was sold after multiple failed public auctions. The High Court set aside the award and sale certificate, holding that the 2002 Act repealed the 1984 Act and that execution should follow the Arbitration and Conciliation Act, 1996. The Supreme Court held that Section 126(6) of the 2002 Act saved pending legal proceedings, so the execution under the 1984 Act remained valid. It also ruled that the respondents had not complied with Rule 37(13) or (14) to challenge the sale, and therefore the sale certificate could not be set aside. Consequently, the appeal was allowed and the High Court judgment was reversed.

Issues considered

The effect of the repeal of the Multi‑State Co‑operative Societies Act, 1984 by the 2002 Act on pending execution proceedings.
Whether execution of an award under the 1984 Act must be governed by the Arbitration and Conciliation Act, 1996 after the 2002 Act came into force.
Whether the respondents complied with Rule 37(13) and 37(14) of the Multi‑State Co‑operative Societies Rules, 2002 to set aside the sale certificate.
Interpretation of the saving clause in Section 126(6) of the 2002 Act.

Legislation cited

Arbitration and Conciliation Act, 1996
General Clauses Act, 1897
Multi-State Co-operative Societies Act, 1984s. 74, s. 76, s. 85
Multi-State Co-operative Societies Act, 2002s. 126(6), s. 84, s. 94

Subjects

Multi-State Co-operative Societies ActSection 126(6) saving clauseexecution of awardarbitrationsealed tender salesale certificateRule 37(13)Rule 37(14)writ petitionrepeal and saving

Judgment

(2016] 6 S.C.R. 440

A LUDOVICO SAGRADO GOVEIA
v.
CIRILA ROSA MARIA PINTO AND ORS.
(Civil Appeal No. 8756 of2016)
B SEPTEMBER 06, 2016
[DIPAK MISRA AND R.F. NARIMAN, JJ.)
Multi-State Co-operative Societies Act, 2002 - s.126 -
Initiation of recovery proceedings u/ss. 74 and 76 of Multi-State
Co-operative Societies Act,1984 - Award - Dema11d notice by the
c Bank - Failure to pay the amounl - Award referred for execution -
Six proclamation notices for sale by public auction - No bidders
came forward - Sale of the mortgaged property by adopti11g the
mode of selling property hy sealed tender - Sale confirmed in favour
of succes4it! bidder (appellant) - Without availing the procedure
D provided under d7 (] 3) of Multi-State Co-operative Societies Rules,
2002, borrower filed writ petition seeking quashing of lhe award
and the sale cerlificale - High Courl set aside the award and
consequellt sale certificate on the ground that all'ard was liable to
be executed 011ly in the manner provided under Arbirration and
Conciliatio11 Act, 1996, 1984 Act havi11g bee11 repealed by the 2002
E
Act - On appeal, held: Proceedings under 1984 Act ll'ere saved by
virtue of s.126(6) of 2002 Act - Thus the execution proceedings
under 1984 Act were valid - Award and the consequent sale
certificate could not have bee11 set aside - Multi-State Co-operatire
Societies Act, 1984 - ss. 74 and 76 - 1\1ulti-State Co-operative Society
F Rules, 2002 - n:37{13) and (14).
Allowing the appeal, the Court
HELD: 1.1 An ad.indication made under Section 74 and 76
of Multi-State Co-operative Societies Act,1984 can be executed
in the manner provided by Section 85 of the 1984 Act. The scheme
G of the Multi-State Co-operative Societies Act, 2002 which
replaces the 1984 Act is a little different. Section 84 of the
2002 Act corresponds to Section 74 and 76 of the 1984 Act.
With this difference - that disputes that have been referred to
arbitration are now to be settled or decided by the Arbitrator
H
440
LUDOVICO SAGRADO GOVEIA v. CIRILA ROSA MARJA 441
PINTO AND ORS.

to be appointed by the Central Registrar, and the provisions, A
therefore, of the 1996 Arbitration and Conciliation Act shall apply
to such arbitration as if the proceedings for arbitration were
referred for settlement or decision under the provisions of the
said Act. [Paras 11, 12) [451-D-F]
1.2 As per Section 126(6) of 2002 Act, any legal proceeding B
pending before any authority at the commencement of the 2002
Act shall be continued to be before that authority- as if the
2002 Act had not been passed. Therefore, the proceeding in
execution initiated under Section 85(c) of 1984 Act and pending
before the authorities under the said Act prior to 19th August,
2002, would continue unhindered by the repeal of the 1984 Act c
by the 2002 Act. [Paras 14, 19] [452-B; 453-B-C)
Governor-General in Council v. Shiromani Sugar Mills
Ltd. AIR 1946 FC 16; Binod Mills Co. Ltd. Ujjain
(M.P.) v. Suresh Chandra Mahaveer Prasad Mantri,
Bombay 1987 (3) SCC 99 : 1987 (3) SCR 247 - relied D
on.
2. In the present case, at no stage were the respondent -
borrowers ready to pay back the entire money borrowed by them
as far back as in 1997. Writ Petition was filed without attempting
to set aside the certificate of sale granted under either Rule E
37(13) or (14) of the Multi-State Co-operative Society Rules,
2002. It is not the appellant's case that the property has been
sold at an undervalue. Also the opportunity to have the sale
certificate set aside under Rule 37(13) has not been availed. For
the petitioner to make out a ground as to irregularity in conducting F
the sale, he has first to apply to the recovery officer within 30
days from the date of sale. And further, the appellant has to make
out a case that he has sustained substantial injury by reason of
such irregularity. Ground V of the Writ Petition does not
even refer to substantial injury for the reason that is not the
appellant's case that the property has been sold at a gross G
undervalue. No relief can be given in the Writ Petition so as to
circumvent the statutory provisions contained in Rule 37(13)
and (14). Ground VI of the writ petition is totally vague and
lacking in particulars. A charge of nwlajides has to be made out
with great clarity and particularity. Also, the appellant cannot H
442 SUPREME COURT REPORTS [2016] 6 S.C.R.

A claim to be in the dark as every auction sale was publicly
advertised in newspapers. Therefore, the rest of the Writ Petition
cannot be, remitted to the High Court for hearing. [Para 22] [454-
C-D; 455-A-D]
Case Law Reference
B AIR 1946 FC 16 relied on Para 15
1987 (3) SCR 247 relied on Para 16
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 8756
of2016.
C From the Judgment and Order dated 23.12.2013 of the High Court
of Bombay at Goa in Writ Petition No. 325 of2007.
Yashraj Singh Deora, Ms. Priyadarshinee Singh, Ms. Asmita Singh,
Advs. for the Appellant.
Arvind Kr. Sharma, Dev Prakash Bhardwaj, Ms. Binu Tamta,
D
Dhruv Tamta, Advs. for the Respondents.
The Judgment of the Court was delivered by
R.F. NARIMAN, J. 1. The present appeal is filed by the
successful purchaser at an auction held in execution of an order dated
E 5.10.2000 of the Assistant Registrar of Cooperative Societies passed
under Section 76 of the Multi State Cooperative Societies Act, 1984
[hereinafter referred to as "the 1984 Act"]. The brief facts of the present
. appeal are as follows.
2. Respondent No. 3 in the High Court, as Proprietor ofM/s Gable
F Builders, obtained a loan of Rs. 40 lacs from the Mapusa Branch of the
Goa State Cooperative Bank Ltd. The said loan was sanctioned for the
purpose of construction of a Bungalow. By a deed of mo11gage executed
on 2.12.1997, the said loan was secured by mortgaging the western part
of the scheduled property admeasuring 8000 sq. mts. The principal
borrower failed to repay the loan installments. That being so, recovery
G proceedings were initiated under Sections 74 and 76 of the said Act by
the Bank against respondent No. 3 and two sureties of the said loan.
The Assistant Registrar of Cooperative Societies, by an Award dated
5.10.2000, noticed that despite being duly served summons by Registered
post A.O., all the three opponents remained absent. As a result, an ex-
H parte award was passed holding all the three opponents jointly and
LUDOVICO SAGRADO GOVEIA v. CIRILA ROSA MARIA 443
PINTO AND ORS. [R. F. NARIMAN, J.]

severally liable to pay the loan dues amounting to Rs 55,04,583/-. It may A
be mentioned that interest was payable at 21 % compounded under the ·
said deed of mortgage dated 2.12.1997.
3. Ademand notice dated 12.6.2001 was then issued by the Bank
under Rule 22 of the Multi State Co-operative Society Rules, 1985 against
all the three said persons for a principal amount of Rs. 60,59,646/- together B
with furtht:r interest at 19% per annum from 1.4.2001 till the date of
payment.
4. In spite ofreceiving the said notice, the defaulters failed to pay ·
any amount towards bank dues, and the bank then referred the said
award for execution to the Sale and Recovery Officer, Regional Office c
at Verem, Goa. The said Recovery Officer issued a proclamation notice
for sale by public auction of the mortgaged property .by publishing a
notice dated 2.1.2002 which was duly published in the Daily Herald on
5.1.2002. Nobody came forward in response to the said notice. Between
January 2002 and February 2007 several proclamation notices were
issued - six in all- to sell the said mortgaged property, but no bidders D
came forward to purchase the said property. The Bank then decided to
sell the said mortgaged property by adopting the mode of selling property
by sealed tender. Accordingly, the Sale and Recovery Officer issued.a
tender notice dated 18.3 .2007 calling for sealed tenders. The said notice .
was published in a local newspaper "The Tarun Bhagat" also of the E
same date. As per the said tender notice, sealed quotations were invited
from the public on or before 23.3.2007.
5. Two sealed tenders were received on 20.3.2007. A bid of Rs.
86,00,000/- received from the appellant in the present appeal was found
to be the highest and accordingly, since the appellant paid the entire bid F
amount of Rs. 86,00,000/-, a Sale Certificate in favour of the appellant
was issued on 23.4.2007.
6. Without availing of the procedure provided by Rule 37 (13) of
the Multi State Co-operative Society Rules, 2002 by which the defaulter/
borrower could approach the authorities with an amount of 5% to be G
paid to the auction purchaser together with the full amount of the
outstanding loan and expenses of attachment and sale to the decree
holder, with interest thereon, within 30 days of confirmation of sale. If
this were done, the said sale could have been set aside. Since the borrower
did not repay at any stage the money borrowed by him, the borrower
H
444 SUPREME COURT REPORTS [2016] 6 S.C.R.

A filed a Writ Petition being Writ Petition No. 325 of2007 dated 21.6.2007
before the High Court of Bombay at Goa to quash both the award and
the certificate of sale accorded in favour of the Appellant.
7. By the impugned judgment dated 23.12.2013, the High Court
has held that the Multi State Co-operative Societies Act, 1984 was
B repealed by the Multi State Co-operative Societies Act, 2002, [hereinafter
referred to as "the 2002 Act"] which Act came into force on 19.8.2002.
According to the High Court, the new Act deems an award passed by
the Assistant Registrar as an award in an arbitration case, which is
executable only under the Arbitration and Conciliation Act, 1996
[hereinafter referred to as "the 1996 Act"], and this being the case, the
c auction proceedings were set aside by the High Court stating that the
award dated 5.10.2000 would be liable to be executed only in the manner
provided by the 1996 Act. It is the correctness of this judgment that has
to be inquired into in the present appeal.
8. Learned counsel for the appellants has placed the relevant
D provisions of both the 1984 Act and 2002 Act, and has relied in particular
on Section 126( 6) of the 2002 Act to contend that all legal proceedings
that had been initiated under the 1984 Act would continue under that
Act. This being the case, it is clear that as execution proceedings were
initiated prior to 19th August, 2002, which is the date of coming into
E force of the 2002 Act, the said proceedings would be saved despite
repeal of the 1984 Act by the 2002 Act.
9. On the other hand, learned counsel appearing on behalf of the
respondent, argued that, under the 2002 Act, the 1996 Act alone would
get attracted, and that, therefore, the High Court judgment was correct.
F Learned counsel further argued that even ifthe impugned judgment were
to be set aside, other points remained to be argued in the Writ Petition so
that the matter could then be remanded back to the High Comt for
further consideration of these other points.
I 0. We have heard learned counsel for the parties. Before dealing
G with the contentions raised before us it will be important to set out some
of the relevant statutory provisions.
"Multi-State Co-operative Societies Act, 1984
74. (I) Notwithstanding anything contained in any other law
for the time being in force, if any dispute (other than a
H
LUDOVICO SAGRADO GOVEIA v. CIRILA ROSA MARIA 445
PINTO AND ORS. [R. F. NARIMAN, J.]

dispute regarding disciplinary action taken by a multi-State A
co-operative society against its paid employee or an
industrial dispute as defined in clause (k) of section 2 of the
Industrial Disputes Act, 1947) touching the constitution,
management or business of a multi-State co-operative
society arises-
B
(a) among members, past members and persons claiming
through members, past members and deceased members,
or
(b) between a member, past member or a person claiming
through a member, past member or deceased member and c
the multi-State co-operative society, its board or any officer,
agent or employee of the multi-State co-operative society
or liquidator, past or present, or _,,
(c) between the multi-State co-operative society or its board
and any past board, any officer, agent or employee, or any D
past officer, past agent or past employee or the nominee,
heirs or legal representatives of any deceased officer,
deceased agent, or deceased employee of the multi-State
co-operative society, or
(d) between the multi-State co-operative society and any E
other multi-State co-operative society, between a multi-State
co-operative society and liquidator of another multi-State
co-operative society and the liquidator of another multi-State
co-operative society.
Such dispute shall be referred to the Central Registrar for
F
decision and no court shall have jurisdiction to entertain
any suit or other proceedings in respect of such dispute :
Provided that all disputes in which a national co-operative
society is a party shall be referred to the Central Registrar
or' any officer empowered to exercise the powers of the
G
Central Registrar.
(2) For the purposes of sub-section (I), the following shall ·
be deemed to be disputes touching the constitutfon,
management or business of a multi-State co-operative
society, namely :-
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446 SUPREME COURT REPORTS [2016) 6 S.C.R.

A (a) a claim by the multi-State co-operative society for any
debt or demand due to it from a member or the nominee,
heirs or legal representatives of a deceased member,
whether such debt or demand be admitted or not;
(b) a claim by a surety against the principal debtor where
B the multi-State co-operative society has recovered from the
surety any amount in respect of any debt or demand due to
it from the principal debtor as a result of the default of the
principal debtor, whether such debt or demand is admitted
or not;

c (3) If any question arises whether a dispute referred to
the Central Registrar is or is not a dispute touching the
constitution, management or business of a multi-State co-
operative society, the decision thereon of the Central
Registrar shall be final and shall not be called in question in
any court.
D
76. Settlement of disputes.- (I) The Central Registrar
may, on receipt of the reference of dispute under section
74,-
(a) elect to decide the dispute himself, or
E (b) transfer it for disposal to any other person who has
been invested by the Central Government with powers in
that behalf.
(2) The Central Registrar may withdraw any reference
transferred under clause (b) of sub-section (I) and decide
F it himself or refer the same for decision to any other person
who has been invested by the Central Government with
powers in that behalf.
(3) The Central Registrar or any other person to whom a
dispute is referred for decision under. this section may,
G pending the decision of the dispute, make such interlocutol)'
orders as he may deem necessary in the interest ofjustice.
85. Execution of decision, etc. - Eve!)' decision or order
made under section 30. Section 31, section 73, section 76,
section 90, section 92 or section 93 shall, if not carried out.-
H
LUDOVICO SAGRADO GOVEIA v. CIRILA ROSA MARIA 447
PINTO AND ORS. [R. F. NARIMAN, J.]

(a) on a certificate signed by the Central Registrar or any A
person authorized by him in writing in this behalf, be deemed
to be a decree of a civil court and shaltbe executed in the
same manner as if it were a decree of such court ; or
(b) where the decision or order provides for the recovery
of money, be executed according to the law for the time B
being in force for the recovery of arrears of land revenue : .
Provided that any application for the recovery in such
manner of any sum shall be made -
(i) To the Collector and shall be accompanied by a certificate
signed by the Central Registrar or by any person authorized c
by him in writing in this behalf;
(ii) Within twelve years from the date fixed in the decision
or order and if no such date is fixed, from the date of the
decision or order, as the case may be; or
D
(c) be executed by the Central Registrar or any person
authorized by him in writing in this behalf, by attachment
sale or sale without attachment of any property of the person
or a multi-State co-operative society against whom the
decision or order has been made.
E
Multi-State Co-operative Societies Act, 2002 _
84. Reference of disputes.- ( 1) Notwithstanding anything_____,
contained in any other law for the time being in forc€,1f
any dispute [other than a dispute regarding disciplinary action
taken by a multi-State co-operative society against its paid
employee or an industrial dispute as defined in clause (k) of
F
section 2 of the Industrial Disputes Act, 194 7 ( 14 ofl 94 7)]
touching the constitution, management or business of a
multi-State co-operative society arises-
(a) among members, past members and persons claiming
through members, past members and deceased members, G
or
-
(b) between the member, past member and persons claiming
through a member, past member or deceased member and-- -
the mutli-State co-operative society, its board or any officer,
H
448 SUPREME COURT REPORTS [2016] 6 S.C.R.

A agent or employee of the mutli-State co-operative society
or liquidator, past or present, or
(c) between the multi-State co-operative society or its board
and any past board, any officer, agent or employee, or any
past officer, past agent or past employee, heirs or legal
B representatives of any deceased officer, deceased agent
or deceased employee of the multi-State co-operative
society, or
(d) between the multi-State co-operative and any other multi-
State co-operative society, between a multi-State co-
C operative society and liquidator of another mutli-State co-
operative society and the liquidator of another multi-State
co·-operative society.
Such dispute shall be referred to arbitration.
(2) For the purposes of sub-section (I), the following shall
D be deemed to be disputes touching the constitution,
management or business of a multi-State co-operative
§OCiety, namely:-
(a) a claim by the multi-State co-operative society for any
debt or demand due to it from a member or the nominee,
E heirs or legal representatives of a deceased member,
whether such debt or demand be admitted or not;
(b) a claim by a surety against the principal debtor where
the multi-State co-operative society has recovered from the
surety any amount in respect of any debt or demand due to
F it from the principal debtor as a result of the default of the
principal debtor, whether such debt or demand is admitted
or not;
(c) Any dispute arising in connection with the election of
any officer of a multi-State co-operative society.
G (3) If a question arises whether a dispute referred to
arbitration under this section is or is not a dispute touching
the constitution, management or business of a multi-State
co-operative society, the decision thereon of the arbitrator
shall be final and shall not be called in question in any court.
H
LUDOVICO SAGRADO GOVEIA v. CIRILA ROSA MARIA 449
PINTO AND ORS. [R. F. NARIMAN, J.]

(4) Where a dispute has been referred to arbitration under A
sub-section (l), the same shall be settled or decided by the
arbitrator to be appointed by the Central Registrar.
(5) Save as otherwise provided under this act, the provisions
of the Arbitration and Conciliation Act, 1996 (26 of 1996)
shall apply to all arbitration under this Act as if the B
proceedings for arbitration were referred for settlement or
decision under the provisions of the Arbitration and
Conciliation Act, 1996.
94. Execution of decisions, etc.- Every decision or order
made under section 39 or section 40 or section 83 or section C
99 or section 10 I shall, ifnot carried out,-
(a) on a certificate signed by the Central Registrar or any
person authorized by him in writing in this behalf, be deemed
to be a decree of a civil court and shall be executed in the
same manner as if it were a decree of such court and such D
decree shall be executed by the Central Registrar or any
person authorized by him in writing in this behalf, by
attachment and sale or sale without attachment of any
property of the person of the person or a multi-State co-
operative society against whom the decision or order has
been made; or E
(b) where the decision or order provides for the recovery
of money, by executed according to law for the time being
in force for the recovery of arrears of land revenue:
Provided that any application for the recovery of any sum
F
shall be made in such manner-
(i) To the Collector and shall be accompanied by a certificate
signed by the Central Registrar or by any person authorized
by him in writing in this behalf;
(ii) Within twelve years from the date fixed in the decision G
or order and if no such date is fixed, from the date of decision
or order, as the case may be; or
(c) be executed by the Central Registrar or any person
authorized by him in writing in this behalf, by attachment
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450 SUPREME COURT REPORTS [2016] 6 S.C.R.

A and sale or sale without attachment of any property of the
person or a multi-State co-operative society against whom
the decision or order has been made.
126. Repeal and saving. ( 1) The Multi-State Co-operative
Societies Act, 1984 (51 of 1984) is hereby repealed.
B (2) Without prejudice to the provisions contained in the
General Clauses Act, 1897 ( 10 of 1897) with respect to
repeals, any notification, rule, order, requirement,
registration, certificate, notice, decision, direction, approval,
authorisation, consent, application, request or thing made,
c issued, given or done under the Multi-State Co-operative
Societies Act, 1984 (51 of 1984) shall, if in force at the
commencement of this Act, continue to be in force and
have effect as if made, issued, given or done under the
corresponding provisions of this Act.

D (3) Every multi-State co-operative society, existing
immediately before the commencement of this Act which
has been registered under the Co-operative Societies Act,
1912 (2 of 1912) or under any other Act relating to co-
operative societies in force, in a y State or in pursuance of
the provisions of the Multi-unit Co-operative Societies Act,
E 1942 (6 of 1942) or the Multi-State Co-operative Societies
Act, 1984 (51of1984), shall be deemed to be registered
under the corresponding provisions of this Act, and the bye-
laws of such society shall, in so far as they are not
inconsistent with the provisions of this Act, or the rules,
F continue to be in force until altered or rescinded.
(4)All appointments, rules and orders made, all notifications
and notices issued and all suits and other proceedings
instituted under any of the Acts referred to in sub-section
( 1) shall, in so far as they are not inconsistent with the
G provisions of this Act, be deemed to have been respectively
-made, issued and instituted under th is Act, save that an order
made cancelling the registration of a multi-State co-
operative society shall be deemed, unless the sociefy.Jias
already been finally liquidated, to be an order made under
section 86 for its being wound up ..
H
LUDOVICO SAGRADO GOVEIA v. CIRILA ROSA MARIA 451
PINTO AND ORS. [R. F. NARIMAN, J.]

(5) The provisions of this Act shall apply to- A
(a) any application for registration of a multi-State co-
operative society;
(b) any application for registration of amendment of bye-
Jaws of a multi-State co-operative society,
pending at the commencement of this Act and to the B
proceedings consequent thereon and to any registration
granted in pursuance thereof.
(6) Save as otherwise provided in this Act, any legal
proceeding pending in any court or before the Central
Registrar or any other authority at the commencement of c
this Act shall be continued to be in that court or before the
Central Registrar or that authority as if this Act had not
been passed."
11. The first thing that can be noticed is that an adjudication made
under Section 74 and 76 of 1984 Act can be executed in the manner D
provided by Section 85 of the 1984 Act. Every decision or order inade
under Section 76 can be executed in three ways. We are concerned
with sub-clause (c ), in particular, inasmuch, as on the facts of the present
case, the execution application was made to attach and sell the property
of the persons against whom the said order has been made. E
12. The scheme of the 2002 Act which replaces the 1984 Act is a
little different. Section 84 of the 2002 Act corresponds to Section 74 and .
76 of the 1984 Act. With this difference-that disputes that have been
referred to arbitration are now to be settled or decided by the Arbitrator
to be appointed by the Central Registrar, and the provisions, therefore,
F
of the 1996 Arbitration and Conciliation Act shall apply to such arbitration
as if the proceedings for arbitration were referred for settlement or
decision under the provisions of the said Act.
13. Thus it can be seen that Section 84 (4) and (5) of the new Act
provide for a different scheme. Equally, Section 94 which provides for
G
execution of certain decisions and orders made under the 2002 Ac!,
mentions various Sections, but Section 84 is conspicuous by its absence.
This is obviously for the reason that the entire proceedings have now to
be conducted under the 1996 Act, including execution of the arbitration
Award made under the sai~ Act. The question before the High Court
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452 SUPREME COURT REPORTS [2016] 6 S.C.R.

A was whether proceedings initiated under the old Act could continue under
the said Act.
14. For this, it is important to advert to Section 126(6), which has
been completely missed by the High Court. By this Section, any legal
proceeding pending before any authority at the commencement of the
8 2002 Act shall be continued to be before that authority as if the 2002
Act had not been passed.
15. The expression "legal proceeding" has been the subject matter
of consideration in the Federal Court decision in Governor-General in
Council v. Shiromani Sugar Mills Ltd., AIR 1946 FC 16. In that
c decision Section 171 of the Indian Companies Act, 1913 came up for
consideration. That Section reads as follows:
"When a winding-up order has been made or a provisional
liquidator has been appointed, no suit or other legal
proceeding shall be proceeded with or commenced against
D the company except by leave of the court, and subject to
such terms as the court may impose."
16. The Federal Court held that the expression "other legal
proceedings" in Section 171 of the Indian Companies Act, 1913 comprises
any proceeding initiated by the revenue for recovery of tax dues under
E the Indian Income Tax Act. There is no warrant for a narrow construction
of such expression as meaning 'proceedings only in courts'. The Federal
Court specifically held that initiating and putting into force the collection
of arrears of income tax as arrears of land revenue by authorities under
the Income Tax Act would be a "legal proceeding".
· 17. In Binod Mills Co. Ltd. Ujjain (M.P.) v. Suresh Chandra
F
Mahaveer Prasad Mantri, Bombay, 1987 (3) SCC 99, this Court had
to construe Section 5 of the M.P. Sahayata Upkram (Vishesh Upbandh)
Adhiniyam, 1978. Section 5 ofthtsaid Adhiniyam reads as follows:
"5. Suspension of suits or other legal proceedings
against reliefundertakings.-As from the date specified
G
in the notification under sub-section (I) ofSectionJ, no suit
or other legal proceeding shall be instituted or commenced
or, if pending, shall be proceeded with against the industrial
undertaking during the period in which it remains a relief
undertaking any law, usage, custom, contract, instrument,
H
LUDOVICO SAGRADO GOVEIA v. CIRILA ROSA MARIA 453
PINTO AND ORS. [R. F. NARIMAN, J.]

decree, order, award, settlement or other provisions A
whatsoever notwithstanding."
18. This Court referred in detail to the aforesaid Federal Court
decision, and further went on to hold that Section 5 would include
execution petitions that were filed to execute decrees under the Code of
Civil Procedure. B
19. It is thus clear that the proceeding in execution initiated under
Section 85(c) of 1984 Act and pending before the authorities under the
said Act prior to l 9'h August, 2002, would continue unhindered by the
repeal of the 1984 Act by the 2002 Act. This being the case, it is clear
that the judgment under appeal is incorrect, and would have to be set c
aside.
20. In the affidavit in reply filed by the bank to the Writ Petition,
the bank states that it has recovered the entire loan due together with
interest amounting to Rs.85, 15,311.75 as against Rs.86 lakhs received in
the auction proceedings, and admits that the balance amount of Rs. D
74,688.25 over and above the loan dues are payable to the borrower.
This being the case, and in order to do complete justice between the
paities, it is ordered thatthe amount of Rs. 74,688.25, together with interest
at the rate of 19 per cent compounded per annum with effect from l"
April, 2007, be paid by the bank to the borrower within a period of four
weeks from the date of pronouncement of this judgment. E
21. Learned counsel for the respondent exh01ted us to send the
matter back for a decision on grounds (V) and (VI) of the Writ Petition
which read as follows:
''(V) The Petitioner further submits that the said Sale
F
Certificate issued by Respondent no.2 pursuant to the notice
dated 17.3.2007 is also void being passed under the colour
of powers, in as much as the Respondent no.2 could not
give a go-bye to the mandate of Rule 36 of the Multi-State
Co-operative Societies Rules and decided to hold the auction
and/ or open the tenders in a period short of 15 days, in as G
much as the said Rule does not provide for relaxation. On
the other hand, it mandates that the notice shall be of a
period of 15 days.
(VI) The entire action of the Respondent No. 2 is malafide
H
454 SUPREME COURT REPORTS [2016] 6 S.C.R.

A and meant to favour of the Respondent No.3 in as much as
facts stated above make it c!ear that, that apart, the conduct
of the Respondents in not providing the certified copies of
the proceedings and keeping the Petitioner in the dark when
she is the owner of the property and surreptitiously seeking
to hold the auction giving a go-bye to the statutory
B
requirements makes it clear that the Respondent No. 2 acted
malafide with respect and which act vitiates the entire
proceedings."
22. We find that after six failed attempts to sell the property we
would not be inclined to accede to this request at this point in tin:ie. We
c find, on the facts of this case, that at no stage were the respondent -
borrowers ready to pay back the entire money borrowed by them as far
back as in 1997. We also find that a Writ Petition was tiled in 2007
without attempting to set aside the certificate of sale granted under either
Rule 37(13) or(l4)ofthe Multi State Co-operative Society Rules, 2002 1•
D 1
( 13) (a) Where immovable property has been sold by the Sale Officer, any person

either owning such property or holding an interest therein by virtue ofa title acquired
before such sale may apply to have the sale set aside on his depositing with the
recovery oflicer -
(i) for payment to the purchaser a sum equal to live per cent of the purchase money,
and
(ii) for payment to the decree-holder. the anmunt of arrears specified in the proclamation
E of sale as that for the recovery of which the sale was ordered together with interest
thereon and the expenses of attachment. if any. and sale and other costs due in respect
of such amount. less amount which may since the date of such proclanrnlion have been
received by the decree-holder.
(b) If such deposit and application arc made within thirty days from the date of sale.
the recovery officer shall pass an order setting aside the sale and shall repay to the
F purchaser, the purchase money so for as tt has been deposited. together with five per
cent deposited by the applicant: Provided that if more than one person have made
deposit and application under this sub-rule, the application of the first depositor to the
oflicer authorised to set aside the sale, shall be accepted.
(c) !fa person applies under sub-rule (14) to set asiclc the sale of immovable property,
he shall not be entitled to make an application under this sub-rule.
( 14) (i) At any time within thirty days from the date of sale of immovable property, the
G decree-holder or any person entitled to share in a rate able distribution of the a~sets or
whose interests are effected by the sale, may apply to the recovery officer to set aside
the sale on the ground of a material irregularity or mistake or fraud in publishing or
conducting it:
Provided that no sale shall be set aside on the ground of irregularity or fraud unless
the recovery officer is satisfied that the applicant has sustained subs1<1ntial injury by
reason of such irregularity, mistake or fraud.
H
LUDOVICO SAGRADO GOVEIA v. CIRILA ROSA MARIA 455
.PINTO AND ORS. [R. F. NARIMAN, J.]

It is of some significance that it is not the appellant's case that the property A
has peen sold at an undervalue. Also, as has been pointed out above, the
opportunity to have the sale certificate set aside under Rule 37(13) has
not been availed. Ground V of the Writ Petition is in reality a ground
relatable to Rule 3 7(14 ), as, according to the petitioner, there is a material
irregularity in conducting the sale. For the petitioner to make out such a
B
ground, he has first to apply to the recovery officer within 30 days from
the datl: of sale. And further, the appellant has to make out a case that
he has sustained subst;mtial injury by reason of such irregularity. Ground
V of the Writ Petition does not even refer to substantial injury for the
reason that is not the appellant's case that the property has been sold at
a gross undervalue. No relief can be given in the Writ Petition so as to c
circumvent the statutory provisions contained in Rule 37(13) and (14).
Ground VI is totally vague and lacking in particulars. A charge of
malafides has to be made out with great clarity and particularity. Also,
the appellant cannot claim to be in the dark as every auction sale was
publicly advertised in newspapers. We, therefore, do not accede to
D
counsel's fervent plea to remit the rest of the Writ Petition to the High
Court for hearing.
23. We therefore set aside the judgment under appeal as a whole.
There will not be any order as to costs.
Kalpana K. Tripathy Appeal allowed. E

(ii) If the application is allowed, the recovery ollicer, shall set aside the sale and may
direct a fresh one.
(iii) On the expiration of thirty days from the date of sale if no application to have the
sale set aside is made or if such application has been made and rejected, the re.covcry
officer shall make an order confirming the sale:
Provided that if he shall have reason to believe that the sale ought to be set aside F
notwithstanding that 110 such application has been made or 011 grounds other than those
alleged in any application which has been made and rejected, he may, after recording his
reasons in writing. set aside the sale.
(iv) Wl1enever the sale of any immovable property is not so confirmed or is set aside.
the deposit or the purchase money, as the case may be. sh al I be returned to the purchaser.
( v) After the confirmation of any such sale, the recovery officer shall grant a certificate
of sale bearing his seal and signature to the purchaser, and such certificate shall state the
G
property sold and the name of the purchaser and it shall be conclusive evidence of the
fact of the purchase in all courts and tribunals. where it may be necessary to prove it
and no proof of the seal or signature of the recovery otliccr shall be necessary unless
the authority be1ore whom it is produced shall have reason to doubt its genuineness.
, (vi) An order made under this sub-rule shall be final, and shall not be liable to be
questioned in any suit or other legal proceedings. H