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PETITIONER: THE RECOVERY OFFICER,LAKHIMPUR & ORS.

       Vs.

RESPONDENT: SMT. RAVINDRA KAUR & ORS.

DATE OF JUDGMENT:       04/12/1996

BENCH: N.P. SINGH, S.B. MAJMUDAR

ACT:

HEADNOTE:

JUDGMENT:                          O R D E R      In 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, Lucknow Bench in different writ petitions moved by the contesting respondents. The 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-Pradesh Co-operative  Societies Act, 1965 (hereinafter referred to  as ‘the  Act’) by  attachment and  sale of  the lands of  the contesting  respondents. It  is not 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.  From  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 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 writ petitioner-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 lands of the  writ  petitioners  and,  therefore,  proceedings  under Section 91  against the  lands of  the writ petitioners were illegal and liable to be queshed.      The High Court accepted the said contention 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

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societies   obtained   decrees   of   court   of   competent jurisdiction as  required by  the provision  to Section  39. Writ Petitions were accordingly allowed.      The aforesaid  decision of the High Court is challenged by the appellant on the ground that the High Court had erred in not  properly construing  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 look at the relevant provision. Section 39 reads as under :-      "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 resisting to      land tenure  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  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, menure,  labour  subsistence,      fodder  for  cattle  or  any  other      thing incidental  to 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 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 in 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      agricultural implements,  transport      equipments or  equipment for  dairy      or for other activities relating to      animal husbandry,  or  for  making,      replacing    or    purchasing    of      farmhouse or shed for cattle or for      other  livestock   or  for  making,      repairing    or    purchasing    of      warehouse    for     storage     of

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    agricultural produce, 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,  maintained 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      last  installment   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   of  raw      material,  industrial   implements,      plant  and   machinery,  workshops,      warehouse  or   business  premises,      upon  the  raw  material  or  other      things so  supplied or purchased by      such member  ad 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;      (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  portion      thereof,  or   in  respect  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.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      implements,  machinery,   upon  the      land so  sought  to  be  reclaimed,      protected, improved or prepared, or      upon the  land for the use of which      the  implements  or  machinery  are      sought to  be 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 payable      to  him  by  a  society   shall  be      liable to  attachment and  sale  in      execution of  a decree in favour of      the  society  irrespective  of  the      object of the loan."

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    The next  relevant section is Section 91 which reads as under :-      "S.91.- Enforcement  of  charge  :-      Notwithstanding anything  contained      in Chapter IX, or any other law for      the  time   being  in   force,  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  existence of the debt      or outstanding demand make an order      directing the  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 the      member, past member or the nominee,      heir or legal representative 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".      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 manner as  laid down by Section 91 for realising the payment of debt  of the members due to the outstanding demand of the society against  such members.  Consequently, 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  Section 91 does is to provide a 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  eveoutable right  in favour  of the society and a corresponding obligation on the part of the lonee to satisfy his dues from the sale of the charged property. When we turn to Section  39, we  find that  only clause  (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 the produce of  the land and not on the land itself out of which the 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 theses 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 stated that clause (a) of Section 39  cannot be effectively pressed in service because

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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. 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 judgment-debtor by  attachment and  sale on execution of the decree. The  proviso does  not contemplate  creation of  any charge on these properties, it contemplates 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  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  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 lonee.  Once that  conclusion  is  reached. Section 91  dealing with  enforcement of the charge goes out of picture.  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  sale  of  other  uncharged property of  the judgment-debtor by resort to 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  91, and  capable  of      execution in  the  manner  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 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:      Provided that  an  application  for      the recovery  of any  such  sum  is

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    made   to    the   Collector    and      accompanied by a certificate signed      by  the  Registrar  or  any  person      authorised by him in this behalf :      Provided    further    that    such      application is made within 12 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      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 who  the order or award has      been made; or      (c)  by   the  civil  court  having      jurisdiction over the matter as if the 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 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.