REPORTABLE

IN THE SUPREME COURT OF INDIA  CIVIL APPELLATE JURISDICTION

        CIVIL APPEAL NO. 1730 OF 2009        (Arising out of SLP No.7531 of 2008)

Woods Beach Hotels Ltd.         …Appellant(s)

VERSUS

Mapusa Urban Co-operative  Bank of Goa Ltd. & Ors.             …Respondent (s)

J U D G M E N T

TARUN CHATTERJEE,J.

1. Leave granted.   

2. This  appeal  is  filed  against  an  interim  order  dated  17th of

March 2008 in Writ Petition No. 138 of 2008 passed by the

High  Court  of  Bombay  at  Goa  whereby  the  High  Court

admitted  the  Writ  petition  filed  by  Respondent  No.1  and

stayed  the  operation  of  order  dated  16th of  August  2007

passed by the Registrar of Co-operative Societies, Goa.   

3. The  relevant  facts  leading  to  the  filing  of  this  appeal  as

emerging from the records of this case have been succinctly

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referred here for the better understanding and determination

of the instant appeal.   

The  MAPUSA  Urban  Cooperative  Bank  of  Goa  Ltd.

(Respondent  No.1,  hereinafter  referred  to  as  “the  Bank”)  had

extended  credit  facility  of  Rs.20  lacs  to  a  proprietary  firm

belonging to one of the Directors of the Woods Beach Hotel Ltd.

(hereinafter  referred  to  as  “the  appellant”)  and  an immovable

property  of  the  appellant  namely  “Soranto”  was  allegedly

mortgaged to  cover the aforesaid credit  facility.  The appellant

was not the principal borrower. The name and constitution of the

appellant  company  was  changed  and  notified  to  the  bank  in

1994  but  the  notice  did  not  mention  about  the  change  of

shareholders. The Bank initiated the proceedings for recovery of

the due amount before the Asst. Registrar (Respondent No.3) of

the Multi  State Cooperative Societies under section 74 of The

Multi  State  Cooperative  Societies  Act,  1984  wherein  the

appellant was impleaded in the capacity of third party mortgagor.

The proceeding was initiated in the old name of the appellant

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company and it was alleged by the appellant that no notice was

served on the appellant.

4. After  obtaining  an  award  from the  Assistant  Registrar,  the

Bank filed execution application on 23rd of  September 1999

for a sum of Rs. 52.35 lacs wherein it sought attachment of

the immovable property of the appellant. After being aware of

the  award,  the  appellant  tried  to  settle  the  matter  with  the

Bank  and  paid  Rs.  6.63  lacs  to  the  Bank  in  the  process.

However the recovery officer of the bank went ahead with the

sale of the mortgaged immovable property and due to non-

availability of buyers eventually the Bank itself purchased the

property  for  Rs.97,04,222/-  and  the  appellant  alleged  non-

service of notice regarding the same.  

5. In July 2004, the appellant was forcibly dispossessed from its

property. Aggrieved by the said action, the appellant preferred

an appeal on 7th of December, 2005 before the Registrar of

Cooperative  Societies  (Respondent  No.  2  herein)  as

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according to them the property was worth more than Rs. 10

Crores  and  no  notice  was given  to  them during  the  entire

process. The appellant had also filed a Writ Petition no. 378

of 2004 in the High Court of Bombay at Goa seeking orders to

restore the possession of the property and to direct the bank

to  deal  with  the  property  after  giving  due  notice  to  the

appellant.  The  High  Court  rejected  the  Writ  petition  by  its

order  dated 29th of  March 2005. Against  this,  the appellant

filed Special Leave Petition No. 17486 of 2005 in this Court,

which was dismissed with the observation that the appeal was

filed  in  the  Court  of  Registrar,  Multi  State  Cooperative

Societies, Goa.

6. The Registrar, during the pendency of the appeal, granted an

interim  stay  of  operation  of  the  order  of  the  Assistant

Registrar  and  directed  stay  of  the  sale  of  the  property  in

question.   By  an  order  dated  16th of  August,  2007,  the

Registrar had set aside the Judgment of Assistant Registrar

and directed the following :-

“(a)  The  award/Judgment  dated  26th August,  1995 passed by the Asst. Registrar against the Appellant Company  is  set  aside  subject  to  the  appellant

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company making payment of Rs. One Lac as cost to the Respondent Bank within a period of two weeks.   

(b) The Asst. Registrar is directed to re-hear the case and decide the same within 6 months.   

(c) The appellant company is directed to deposit with the Asst. Registrar the amount of the decretal dues as on date of  this order within 4 weeks from today and this amount shall be held by the Asst. Registrar in  interest-earning  deposit  for  6  months  pending decision from the Asst. Registrar.”     

Meanwhile, the Bank tried to find prospective buyers and tried

to  sell  off  the  property  in  question  to  a  buyer  named Softitel

Hospitality & Management which was found to be the highest

bidder  having  offered  a  price  of  Rs.  7.04  crores  during  the

auction conducted by the bank and they deposited an amount of

Rs.1 crore on 06th of May, 2006 with the bank in pursuance of

their bid. At the same time, the bank filed a review application

praying for review of the order before the Registrar, which was

also dismissed.   

7.  Against  the aforesaid order  of  the Appellate Authority,  the

Registrar of Cooperative Societies, Goa, the Bank has filed a

writ  petition  being  W.P.  No.  138  of  2008  before  the  High

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Court of Bombay at Goa, which is now pending decision.  In

the said writ application, the Bank has taken a plea inter alia

that the Registrar had no jurisdiction to entertain the appeal

against the order of the Assistant Registrar.    

8. While entertaining the prayer for interim relief, the High Court

prima facie found that the appeal itself was not maintainable

because  the  impugned  order  was  passed  nearly  after  10

years  when  there  was  no  right  subsisting  in  favour  of  the

appellant bank on the day, the appeal was filed.  Some other

findings  were  made  in  favour  of  the  appellant  bank  prima

facie and for  that  purpose,  the interim order  of  stay of  the

operation of  the order  of  the  Registrar  was granted by the

High Court.  However, in the impugned interim order, it would

also be evident that a prayer was made by the appellant that

the status quo should be maintained by the parties during the

pendency  of  the  writ  petition  in  respect  of  the  property  in

question.  The High Court by the impugned order rejected the

said prayer and the Special Leave Petition has been filed in

this Court against the said refusal, which, on grant of leave,

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was heard  in  the  presence  of  the  learned  counsel  for  the

parties.    

9. Since the appellant has already filed the writ petition, which is

pending  before  the  High  Court,  in  which  the  question  of

jurisdiction  of  the  Registrar  to  entertain  the  appeal  filed

against the order of the Assistant Registrar shall be decided

finally by the High Court  in the writ  application,  we are not

inclined  to  delve  into  the  questions  raised  by  the  parties

before  us  in  depth  at  this  stage  of  the  proceedings.  The

learned Senior Counsel appearing on behalf of the appellant

sought to argue before us that during the pendency of the writ

application, the parties should be directed to maintain status

quo in respect  of  the property mortgaged by the appellant.

On the other hand, the learned senior counsel appearing for

the respondent  bank sought  to  argue that  since they have

already accepted a bid of Rs. 7.04 crores offered by Softitel

Hospitality  &  Management,  they  will  suffer  irreparable  loss

and injury if status quo is granted till the disposal of the writ

application. Reliance was placed in a decision of this Court in

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the  case  of  Padanathil  Ruqmini  Amma  vs.  P.K.Abdulla

[1996  (7)  SCC 668]  for  the  parties  showing  that  when the

decree holder himself  was the auction purchaser in a court

auction  sale  held  in  execution  of  a  decree  which  is

subsequently  set  aside,  restitution  of  the  property  can  be

ordered  in  favour  of  the  judgment-debtor  and  the  decree-

holder auction purchaser is bound to return the property. In

that decision, it was also held that it is equally well settled that

if  at  a  court  auction  sale  in  execution  of  a  decree,  the

properties are purchased by a bona fide purchaser who is a

stranger to the court  proceedings,  the sale  in his  favour  is

protected and he cannot be asked to restitute the property to

the judgment-debtor if the decree is set aside. It was further

held  in  that  decision  that  the  ratio  behind  this  distinction

between a sale to a decree-holder and a sale to a stranger is

that the court, as a matter of policy, will protect honest outside

purchasers  at  sales  held  in  the  execution  of  its  decrees,

although  the  sales  may  be  subsequently  set  aside,  when

such purchasers are not parties to the suit. At this stage, the

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principle  laid  down by  this  Court  in  the  aforesaid  decision

need not be gone into in view of the fact that –  

(1) The impugned order passed by the High Court was

the interim order in nature.   

(2) The sale by the auction has not yet been confirmed

nor the Softitel Hospitality and Management has yet

deposited  the  entire  sale  consideration  money  nor

any  sale  deed  has  been  effected  relating  to  the

property in question ?

10. Considering the facts of the present case and taking into

account the fact that the Softitel Hospitality & Management was

the highest bidder in the auction held by the bank and they have

already deposited an amount of Rs. 1 crore with the bank, we

are of the view that  a third party interest has now been created

in  the  aforesaid  property.  It  is  not  in  dispute  that  the  Softitel

Hospitality  and  Management  has  not  yet  put  in  the  balance

amount of Rs.6.04 crores nor the sale has yet been confirmed. It

is  also  not  in  dispute  that  the  possession  of  the  property  in

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question has not yet been handed over to Softitel Hospitality and

Management by the  bank. Under the aforesaid circumstances,

and considering the balance of convenience and inconvenience

and for meeting the ends of justice, we feel it proper to dispose

of this appeal in the following manner: -  

(a)    In the event,  the appellant  deposits a sum of  Rs. 6.04

crores  in  the  pending  writ  application  before  the  High  Court

within three months from this date, the parties shall be directed

to  maintain  status  quo  as  regards  the  property  in  question

initially  for  a  period  of  three  months  unconditionally  from this

date and in the event the aforesaid amount is deposited within

the time specified hereinabove, the interim order shall continue

till  the disposal of the writ petition or until  further orders to be

passed by the High Court in the writ application.

(b) In  default  of  making  the  deposit,  as  mentioned  herein

above,  the  interim order,  as  granted,  shall  automatically

stand vacated.  

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(c) We make it clear that we have not gone into the question

whether the impugned order granting ad interim stay of the

order of the Registrar was justified or not,  as the parties

before us have restricted their arguments in respect of the

grant  of  status quo relating to the properties in question

only.  

(d) The High  Court  is  requested  to  decide  the  pending  writ

petition within three months from the date of supply of a

copy  of  this  order  positively,  after  giving  hearing  to  the

parties and after passing a reasoned order in accordance

with law.   

11. We  make  it  clear  that  whatever  observations  that  have

been made by the High Court in the impugned order and any

observations, on the merits of the writ petition, if made by us in

this  order,  shall  not  stand in  the  way of  the  High Court  from

deciding the writ application on merits without being influenced

by such observations, if any.   

12.  The appeal is thus disposed of.  There will be no orders as

to costs.            

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…………………………J. [TARUN CHATTERJEE]

…………………………J.    [HARJIT SINGH BEDI]

NEW DELHI March  24, 2009.

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