Supreme Court of India
THE RECOVERY OFFICER, LAKHIMPUR AND ORS.versusSMT. RAVINDRA KAUR AND ORS.
- Citation
- 1996 INSC 1435
- Decided
- 4 December 1996
- Disposal
- Dismissed
Holding
Only clause (a) of Section 39 creates a charge on the produce of the land, not on the land itself, and the proviso does not create a charge on other properties; therefore Section 91 cannot be invoked to attach and sell the land.
Summary
The Recovery Officer, under the Uttar Pradesh Co-operative Societies Act, 1965, initiated recovery proceedings under Section 91 to attach and sell the lands of members who had defaulted on loans taken for seeds and manure. The members contended that the statutory charge created by Section 39(a) attaches only to the crops or produce arising from the loan, not to the land itself, and that the proviso to Section 39 does not create a charge on other properties. The Allahabad High Court held that the land was not subject to any charge under Section 39 and therefore the sale of the land under Section 91 was illegal, quashing the recovery proceedings. On appeal, the Supreme Court affirmed this view, stating that only clause (a) of Section 39 is attracted, creating a charge on produce, not land, and that the proviso does not extend the charge to other properties. Consequently, Section 91 could not be invoked to enforce a non‑existent charge on the land, and the appeals were dismissed.
Issues considered
- Whether a loan taken for seeds and manure creates a statutory charge on the land of the borrower under Section 39(a) of the Uttar Pradesh Co-operative Societies Act.
- Whether the proviso to Section 39 creates a charge on other properties of the borrower in the absence of a decree.
- Whether Section 91 can be used to attach and sell land that is not subject to a charge under Section 39.
Legislation cited
Subjects
statutory chargeco-operative societiesloan recoverySection 39Section 91attachment and salelandproduceprovisoenforcement
Judgment
THE RECOVERY OFFICER, LAKHIMPUR AND ORS. A
v.
SMT. RA VIND RA KAUR AND ORS.
DECEMBER 4, 1996
(N.P. SINGH AND S.B. MAJMUDAR, JJ.] B
U.P. Co-operative Societies Act, 1965 :
Sections 39 and 91-lnterpretation of-Proviso to Section 39-Ap-
~~ ~ c
Co-operative Society-Members-Loan obtained from Society for seeds
and manure-Default-Recovery proceedings initiated for enforcing the
statutory charge under Section 39(a) read with Section 91-Challenge by
members contending that proceedings under Section 91 against their lands
were illegal as their lands were not subject matter of any charge under Section D
39---High Court quashed the recovery proceedings holding that sale of the
lands belonging to the members could not be effected unless the concemed
societies obtained decrees of cowt of competent jurisdiction as required by
the proviso to Section 39-Appeal before Supreme Court-Held, only clause
(a) of Section 39 would get attracted on the facts of the present E
case-Clause(a) creates a statutory charge on the crops or produce of the land
which result out of the utilisation of the seeds or manure loan which is said
to have been taken by the concerned member-Therefore, the charge attaches
to the produce of the land and not on the land itself out of which the said
produce is realised-Proviso to Section 39 would encompass in its fold all
other properties of the indebted member provided there is a decree in favour F
of the society-As the lands of the writ-petitioners were not the subject-matter
of any charge under Section 39, there was no occasion for Recovery Officer
to proceed under Section 91 for enforcement of such non-existing charge on
the lands-Till the society obtained executable decrees on the basis of the loan
amounts there would arise no occasion for the society to get attachment and G
sale of other uncharged property of the judgment-debtor by resort to the
proviso to Section 39-The High Court was justified in quashing the steps
tcken by the appellants for sale of the lands belonging to the respondents.
CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 3238-40
~~ H
529
530 SUPREME COURT REPORTS [W96] SUPP. 9 S.C.R.
A From the Judgn;ent and Order dated 15.2.79 of the Allahabad High
Court in W.P. No.1108 of 1976.
Ranjit Kumar for the Appellants.
S.K. Jain, A.P. Dhamija and Pradeep Aggarwal for the Respondents.
B
The following Order of the Court was delivered :
tn these appeals Recovery Officer functioning under the U.P. Co-
operative Societies Act, 1965 and others have brought in challenge the
judgment and order of the High Court of Judicature at Allahabad, Luck-
e now Bench in different writ petitions moved by the contesting respondents.
\he High Court allowed the writ petitions of the contesting respondents
concerned and quashed the recovery proceedings initiated against them in
so far as they related to the execution order under Section 91 of the Uttar
Pradesh Co-operative Societies Act, 1965 (hereinafter referred to as 'the
D Act') by attachment and sale of the lands of the contesting respondents. It
is Ml in dispute between the parties that the original writ petitioners being
members of the co-operative societies concerned had taken loans for seeds
and manure etc. form these societies functioning under the Act. When the
contesting respondents did not repay the loans, the co-operative· societies
which advanced the loans sought to. enforce the statutory charge on the
E properties of the writ petitioners as created by Section 39(a) of the Act.
Recovery proceedings for enforcing the said charge were initiated under
Section 91 read with Section 39(a) by the appellant Recovery Officer. The
contesting respondent writ petitioners moved the High Court challenging
these recoveries. It was contended before the High Court by the contesting
F writ petitioners-lonees that as the loans were taken for procuring seeds and
manure etc. charge under Section 39(a) attached to the crops produced in
the lands of the contesting respondents by utilising seeds and manure
procured out . of the loan amounts but the said charge did not fasten on
the other properties and the lands of the W.rit petitioners and, therefore,
G proceedings under Section 91 against the lands of the writ petitioners were
illegal and liable to be quashed. The High Court accepted the said conten-
tion and allowed the writ petitions by holding, on construction of Section
39 read with Section 91 of the Act that for realisation of loans advanced
for the objects mentioned in Section 39 (a) of the Act, sale of the lands
belonging to the writ petitioners could not be effected unless the concerned
H societies obtained decrees of court of competent jurisdiction as required
RECOVERYOFF1CER,LAKHIMPURv. RAVJNDRAKAUR 531
by the proviso to Section 39. Writ Petitions were accordingly allowed. A
The aforesaid decision of the High Court is challenged by the appel-
lant on the ground that the High Court had erred in no( properly constru-
ing the provision in Section 39 (a) read with Section 91 of the Act. In order
to appreciate the aforesaid contention, it is necessary to have a look at the
relevant provision. Section 39 reads as under : B
"S.39 - First charge of co-operative society on certain assets -
Notwithstanding anything contained in the Provincial Insolvency
Act, 1920 (Act V of 1920), or in the Code of Civil Procedure, 1908
(Act V of 1908), or in any other enactment relating to land tenure C
for the time being in force, any debt or outstanding demand due
to a co-operative society by any member, past or present, or
standing against the estate of any deceased member, shall subject
to any claim of the Central Government or the State Government
arising from a loan granted by it before, but not after, the grant of
the loan by the society, or in respect of land revenue or any sum D
recoverable as arrears of land revenue, be a first charge -
(a) if such debt or demand is due in respect of the supply of, or
any loan to provide the means for, seed, manure, labour
subsistence, fodder for cattle or any other thing incidental to E
the conduct of agricultural operations, upon the crops and
agricultural produce of such members ;
(b) if such debt or demand is due in respect of any loans to
provide the means for paying the rent or revenue of the land
or for irrigation facilities, upon the land whose rent or F
revenue has been so paid or, as the case may be, on which
the irrigation facilities have been provided ;
(c) if such debt or demand is due in respect of supply of, or any
loans to provide the means for the purchase of cattle, or other
livestock, or for the purchase, repair or maintenance of G
agricultural implements, transport equipments or equipment
for dairy or for other activities relating to animal husbandry,
or for making, repairing or purchasing of farm-house or shed
for cattle or for other livestock or for making, repairing or
purchasing of warehouse for storage of agricultural produce, H
·•
532 SUPREME COURT REPORTS [1996) SUPP. 9 S.C.R.
A then upon the farm-produce of such members and also upon
the cattle, livestock so purchased, or upon the equipments, -
warehouse, farm-house or shed so purchased, repaired, main-
tained or made wholly or partially out of any such loan, and
if the borrower is a land-holder, then upon his land also, at
any time within three years from the date on which the
B
instalment of such loan becomes repayable ;
(d) if such debt or demand is due in respect of the supply of, or
any loan for the purchase for raw material, industrial irnple-
ments, plant and machinery, workshops, warehouse or busi-
c ness premises, upon the material or other things so supplied
or purchased by such member and in the case of a debt or
demand in respect of the supply, or for the purchase of raw
materials also upon the articles manufactured from such raw
material;
D (e) if such debt or demand is due in respect of any loan for the
purchase or redemption of land, upon the land so purchased
or redeemed;
(f) if such debt or demand is due in respect of any loan for the
purchase or construction of any house or building or any
E
other portion thereof, or in respecl of the supply of materials
for such constructions upon the house or building or materials
so purchased or constructed or supplied; and
(g) if such debt or demand is due in respect of any loan of Rs.
F 500 or more for reclaiming or protecting land or for effecting
improvement on land or for preparation of land for orchard
or plantation or for purchase of cattle, agricultural imple-
ments, machinery, upon the land so sought to be reclaimed,
protected, improved or prepared, or upon the land for the
nse of which the implements or machinery are sought to be
G purchased and in case of purchase of cattle, upon any land
of the borrower:
Provided that along with the charge created under this section
all other property of the indebted member including any amount
H payable to him by a society shall be liable to attachment and sale
RECOVERY OFFICER, LAKHIMPUR v. RAVINDRAKAUR 533
in execution of a decree in favour of the society irrespective of the A
object of the loan."
The next relevant section is Section 91 which reads as under :
"S.91- Enforcement of charge : - Notwithstanding anything con-
tained in Chapter IX, or any other law for the time being in force, "B
but without prejudice to any other mode of recovery provided in
this Act, the Registrar or any other gazetted officer subordinate
to him, and authorised by him in this behalf may, on the application
of a co-operative society and on being satisfied of the existence of
the debt or outstanding demand make an order directing the C
payment of such debt or outstanding demands due to the society
by any member or past or deceased member, by sale of the
property or any interest therein, which is subject to a charge under
Section 39 :
Provided that no order shall be made under this section, unless D
the member, past member or the nominee, heir or legal repre·
sentative of the deceased member, has been served with a notice
of the application and has failed to pay the debt or outstanding
demand within one month from the date of service".
E
A conjoint reading of the aforesaid two provisions clearly shows_.that
before a charge can be enforced under Section 91 .by way of recovery
proceedings, it has to be shown that the concerned property of the debtor
was subjected to a statutory charge under Section 39 and it is such a
charged property which can be sold in the summary mariner as laid down
F
by Section 91 for realising the payment of debt of the members due to
the outstanding demand of the society against such members. Consequent.
ly, it has to be found out whether the proposed sale of the property is
referable to any charge which is settled on such property under Section
39. Section 91 lays down the procedure for enforcement of the charge
which is referable to Section 39. All .that Sectioµ 91 does is to provide a G
mode for enforcing the said charge. Once a charge is found to have been
created on the concerned property as per Section 39, then it would create
an executable right in favour of the society and a corresponding obliga·
lion on the part of the loanee to satisfy his dues from the sale of the
charged property. When we turn to Section 39., we find that only clause H
534 SUPREME COURT REPORTS (1996) SUPP. 9S.C.R.
A (a) of the said section would get attracted on the facts of the present case.
Clause (a) creates a statutory charge on the crops or produce of the land
which result out of the utilisation of the seeds or manure loan which is
said to have been taken by the concerned member. Therefore, the charge
-
attaches to produce of the land and not on the land itself out of which the
B said produce is realised. In this connection, we may usefully refer to clauses
(b), (c), (e) and (g) of Section 39 which create charge on land of the debtor
member under circumstances contemplated by these clauses. It is not the
case of the appellants that any such charge on writ petitioners' lands was
created under these clauses. Learned· counsel for the appellants fairly
C stated that clause (a) of Section 39 cannot be effectively pressed in service
because charge was not created on the land.on account of the fact that the
loan was taken by the concerned member for purchasing seeds or manure.
However, his submission was, that charge on all other, properties of the
debtor was created in favour of the society by the proviso to.Section 39.
D A mere look at the proviso shows that it would encompass in its fold all
other properties of the indebted member provided there is a decree in
favour of the society. Then irrespective of the object of the loan such a
decree-holder society can proceed against any other property of the judg-
ment-debtor by attachment and sale in execution of the decree. The proviso
E does not contemplate creation of any charge on these properties. It con-
templates execution of the decree for a given sum of money and such a
decree could be executed by attachment and sale of any of the properties
of the judgment-debtor even though not subjected to any charge under
Section 39. Proviso has nothing to do with creation of charge. Statutory
charge is contemplated by clauses (a) to (g) of Section 39 only. The very
F opening words of the proviso show that along with the charge created
under this section meaning thereby under Section 39 clauses (a) to (g)
respectively any other property i.e. not subjected to charge also can be
proceeded against if the society has an executable decree against the
debtor. All other properties mentioned in the proviso mean those which
G are not the subject-matter of the charge. It cannot, therefore, be said that
proviso enlarges the scope of Section 39 (a) to (g) and creates a further
statutory charge. It must, therefore, be held that the High Court was
justified in taking the view that under the proviso no further charge is
created on other property of the loanee. Once that conclusion is reached,
H Section 91 dealing with enforcement of the charge goes out of picture. As
•
RECOVERYOFFICER,LAKHIMPURv. RAVINDRAKAUR 535
the lands of the writ-petitioners were not the subject-matter of any charge A
under Section 39, there was no occasion for Recovery Officer to proceed
under Section 91 for enforcement of such non-existing charge on the lands.
Till the society obtained executable decrees on the basis of the· loan
amounts there would arise no occasion for the society to get attachment
and sale of other uncharged property of the judgment-debtor by resort to B
the proviso to Section 39. It is also pertinent to note that execution of
decree is contemplated by Section 92 and not by Section 91. Section 92
reads as under : -
"S.92. - Execution of certain orders"and awards. - Every award
made under Section 71, and capable of execution in the manner C
provided below, and every order so capable of execution made by
the Registrar under Section 67 or sub-section (2) of Section 68 or
under Section 91, or by the liquidator under Section 74 or by an
appellate authority on appeal under Section 97 or 98 or on review
under Section 99 or as an interlocutory order under Section 100 D
or a certificate for recovery issued under Section 95-A shall, if not
carried out, be executed -
(a) in the manner provided by law for the time being in force for
the recovery of arrears of land revenue:
E
Provided that an application for the recovery or any such
sum is made to the Collector and accompanied by a certifi-
cate signed by the Registrar or any person authorised by him
in this behalf:
Provided further that such application is made within 12 F
years from the date fixed for payment in the order or award
and if no such date is fixed, from the date of the order or
award, as the case may be; or
(b) by the Registrar or any other person subordinate to him and G
empowered by him in this behalf, by attachment and sale or
sale without attachment of any property of the person or the
co-operative society against whom the order or award has
been made; or
(c) by the civil court having jurisdiction over the matter as if the H
536 SUPREME COURT REPORTS [1996) ~UPP. 9 S.C.R.
A order or award were the decree of that court."
For all these reasons, therefore, it must be held that the High Court
was justified in quashing the steps taken by the appellants for sale of the
-
lands belonging to the respondents. We make it clear that our aforesaid
conclusion is reached in the context of the loans advanced under Section
B 39(a) of the Act. It would be open to the appellants to pursue other
remedies available for realisation of the loan amounts advanced to the
respondents writ-petitioners in accordance with law. These appeals fail and
are dismissed with no order as to costs.
T.N.A. Appeals dismissed.
Search Indian case law
Ask in plain English, not just keywords. 25,000 AI words free, no card.
Try "statutory charge"Sign in to search