M/S. SHILPA SHARES AND SECURITIES AND ORS versus THE NATIONAL CO-OPERATIVE BANK LTD. AND ORS

Citation: [2007] 5 S.C.R. 1128 · Decided: 02-05-2007 · Supreme Court of India · Bench: S.B. SINHA · Disposal: Appeal(s) allowed

Cited by 1 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

A 
B 
MIS. SH!LPA SHARES AND SECURITIES AND ORS 
v. 
THE NATIONAL CO-OPERATIVE BANK LTD. AND ORS 
MAY2, 2007 
[S.B. SINHA AND MARKANDEY KA TJU, JJ.] 
Maharashtra Co-operative Societies Act, 1960/Maharashtra Co-
operative Societies Rules, 1961; Rule 107: 
C 
Loan-Default in payment by borrower-Recovery by Auction sale of 
the property of borrower-85% of the purchase money not paid by the 
purchaser-Effect of-Held: Sale was not valid-Under the circumstances, 
the bank is directed that the property be again auction sold after proper 
advertising and complying with the procedure under R.107 of the Rules-
D Sale of Goods Act, 1930---Sale. 
Appellant had borrowed a loan from respondent No.I, a co-operative 
bank. Since the appellant was in default in payment of the loan, recovery 
proceedings were initiated against it by the bank under the Maharashtra Co-
operative Societies Rules, 1961. In pursuance of the recovery in terms of 
E R.107 of the Rules farmed under the Act, an auction was held for sale of the 
appellants' properties. Under Rule 107(ll)(g) of the Rules, 15% of the price 
of the immovable property has to deposited by the auction purchaser at the 
time of the purchase and the remaining 85% of the purchase money has to 
be paid within 15 days from the date of such sale. Admittedly, in the present 
F case, the aforesaid 85% of the purchase money required to be paid within 15 
days from the date of such sale was not paid nor even paid thereafter. Aggrieved, 
the appellant challenged the sale as not valid. The petition was dismissed by 
the High Court. Hence the present appeal. 
G 
H 
Allowing the appeals, the Court 
HELD: I.I. In the decided case of Bairam v. ilam Singh and others, this 
Court held that the obligation of the purchaser to deposit the full purchase 
money within time is a mandatory requirement and non-compliance of the rule 
renders the sale a nullity and not a mere irregularity. In view of the above, 
the auction sale of the appellants' property was a nullity, and there was no 
1128 
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I 
SHILPA SHARES AND SECURITIES '· NATIONAL CO-OPERATIVE BANK LTD. (MARKANDEY KA TJU,l. J J 129 
valid auction sale. [Paras 6 and 7) (1130-C, DI 
A 
Manila! Mohan/al Shah and Ors v. Sardar Sayed Ahmed Sayed Mahmad 
and Anr., AIR (1954) SC 349 and Bairam v. Jlam Singh and Ors., [1996[ 5 
sec 705, relied on . 
1.2. It is directed that the said property be again auction sold after B 
advertising it in at least two well-known newspapers having wide circulation, 
mentioning therein the date, time and place of the auction sale and after 
complying with the procedure under Rule 107 of the Maharashtra Co-
operative Rules. [Para 9) (1130-E) 
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 6760-6761 of c 
2004. 
From the Final Judgment and Order dated 16.01.2003 & 07.03.2003 of the 
High Court of Judicature at Bombay in Writ Petition No. 105 of2003 & Review 
Petition No. 31 of2003, respectively. 
D 
Dr. Rajeev B. Masodkar and Anil Kumar Jha for the Appellants. 
E.C. Agrawala, Mahesh Agrawal, Gaurav Goel, Amit Kumar Sharma, 
Neha Aggarwal, Varun Mathur and Mridula Ray Bharadwaj for the 
Respondents. 
E 
The Judgment of the Court was delivered by 
MARKANDEY KAT JU, J. I. These appeals have been filed against the 
impugned judgment and order dated 16.1.2003 of the Bombay High Court in 
writ petition No. 105/2003. 
F 
2. Heard learned counsel for the parties and perused the record. 
3. The appellant had taken a loan from respondent No. 1, which is a co-
operative bank registered under the Maharashtra Co-operative Societies Act, 
1960 (hereinafter referred to as the 'Act'). Since the appellant was in default G 
in payment of the loan, recovery proceedings were taken under the Maharashtra 
Co-operative Societies Rules, 1961 (hereinafter referred to as the 'Rules'). 
4. In pursuance to the recovery, recourse was taken to the procedure 
for attachment and sale of the property of the appellant prescribed in Rule 
107 of the Rules, framed under the Act. An auction was held for sale of the H 
1130 
SUPREME COURT REPORTS 
[2007] 5 S.C.R. 
A appellants' properti.es. Under Rule 107(1 l)(g) of the Rules, 15% of the price 
of the immovable property has to be deposited by the auction purchaser at 
the time of the purchase, and the remaining 85% of the purchase money has 
to be paid within 15 days from the date of such sale. Admittedly, in the 
present case, the aforesaid 85% of the purchase money was not paid within 
B 15 days 

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