BOARD OF DIRECTORS OF ANDHRA PRADESH CO- OPERATIVE CENTRAL LAND MORTGAGE BANK LTD. ETC. versus CHITTOR PRIMARY CO-OPERATIVE LAND MORTGAGE BANK LTD. ETC.

Citation: [1974] 3 S.C.R. 440 · Decided: 21-02-1974 · Supreme Court of India · Bench: P. JAGANMOHAN REDDY · Disposal: Dismissed
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Judgment (excerpt)

440 
BOARD OF DIRECTORS OF ANDHRA PRADESH CO~ 
A 
OPERATIVE CENTRAL LAND MORTGAGE BANK LTD. ETC. 
v. 
CHITTOR PRlMARY CO-OPERATIVE LAND MORTGAGE 
BANK LTD. ETC. 
Febwary 21, 1974. 
[P. JAGANMOHAN REDDY, S. N. DWIVEDI AND P. K. GosWAMI, JJ.] 
Audlrra Pradellr Cuoperarivl!'. Societies Act, 1964, Sections 84, 85, 93, 94, 
97, I 00-109, 115, I 16A and 130-A rrdltra Pradesh Cooperatil'e Societies Rules, 
Rule 70(1)(13) and 04)-Act conferring srrpervisory powers 011 Central Land 
Mortgage Bank over Cooperative Land Mortgage Banks in the State-Rule em· 
po;>-ering B011rd of Central Bank to constitute a centralised serTice for tire mort' 
gage banks and to levy contribruion from tlrem for the purpose.-R11/e :10 
wlrethtr ultra vires of section 115 of the Act. 
· 
The Andhra Pradesh Cooperative :Societies Act, 1974 created a Qentral 
Land Mortgage Bank to supervise the functioning of the Cooperative ·.t.and 
I\lortgage Banks in the State. The scheme· of the Act is that the provisions of 
Chapter XJII thereof relating to advancement of loans and mode of Tecovery 
of the amounts are made applicable to the Cooperative Land Mortgage Banks 
in the State. Sec. 85 permits a mortgage bank to advance lol!I)S for the 
purpose specified therein and to hold lands. the possession of whjch is trans-
ferred to it. By virtue of the provisions of section 100·109 any loan granted 
by a mortgage bank including any interest chargeable thereon and costs, if 
:my, 
incurred in connection therewith shall, 
when they become due. 
be 
recoverable by the mortgage bank. All powers in respect of the recovery of 
loans are conferred on the mortgage banks. The Collector is empowered to 
make recoveries during a certain period; he. is also given the power of dis-
traint and sale. 
When the power of sale is to be exercised, thl! 
oowers 
of 
the mortgage bank where mortgaged property is destroyed or security becomes 
insufficient, the power of the Board of Trustees to distrain and sell property 
are also provided for. The title of the purchaser is not to be. questioned em 
the ground of irregularity nor can a mortgage be questioned on the insolvency 
of the mortgagor. 
Appointment of a Receiver and his powers are provided for 
Section~ 93 
and 94 empower a mortgage bank or the Central Mortgage Bank notwith-
standing anything contained in :my law for the time being in force to purchase 
any mortgaged property sold under Chapter XIII of the Act and the property 
~o purchased shall be disposed of by such banks by sale within such period 
as may be fixed. 
Sec. 95 provides that pa:yment of all monies rlu·~ to mortgage 
hanks are payable to it and such· payments shall be valid as if the mortgage 
had not been so trans.ferre<.l. The mortgage bank shall, in the absence of uny 
~pecific direction to the contrary, issued . by the Board of Trustee nnd com· 
municated to the mortgage bank, "'be entitled to sue on the mortgage or take 
arty other proceeding for the recovery of the moneys due under the mortgage. 
Sec. 115 provides that subject to the provisions of the Act the Board shall 
have such power of supervision over the mortgage banks including the power 
of appointment, transfer and disciplinary action in respect of the emplorecs 
of mortgage banks as may be prescribed. By section 130, the Government 
is empowered to make rules for carrying out all or anv of the. purpost"s of 
th:: Act. 
Sec. 116-A empowers the Regstrar of Cooperative Societies to create 
<1 common cadre of employee~ in any class of cooperative society if he consi· 
ders it necessary in the interest of the cooperative movement to do so. 
Sub-Rule (I) of Rule 70 empowers the Bonrd of Directors of the Central 
Lnnd Mortgage Bank to constitute a centralised. service for the mort~agc banks 
in the St:tte and with effect from .such constitution the Board shall have power 
to make appointments to the posts brought under the centralised service and the 
B 
c 
D 
E 
F 
11 
A 
B 
c 
D 
E 
F 
G 
H 
A.P. CO·UP. MORTGAGE BANK V. CHITTOR BANK 
441 
mortgage banks shall have no power to make appointments to such posts. 
Sub-l<ule (13) empowers- the Board to levy contributions from the mortgage 
banks towards the _cost of service rendere~ by the Central Mortgage Bank. 
Sub-ntl~ . ( 14) prov1des that .on~~ . a ~entra!Jsed cadre is constituted all rishts 
a~d pn~ileg;es accrued and habthhes mcurred by the employee in relation to 
hts servtce m the mortgage bank shall stand vested with the Board. 
In three writ
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