- Case
- AAYAN MULTI TRADE LLP THROUGH ITS AUTHORIZED OFFICER v. SUNITABAI MADHUKAR PATIL AND ANOTHER (Bombay High Court, 20-03-2025)
- Law
- Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, Maharashtra Co-operative Societies Act, Code of Civil Procedure.
Facts: Aayan Multi Trade LLP (the petitioner) purchased a sugar factory from Astoria Agro, which had previously acquired it in a Securitisation Act auction initiated by the Maharashtra State Cooperative Bank (MCS Bank) due to the original owner's (Respondent No. 2, the Sugar Factory) loan default. Respondent No. 1, a depositor of the sugar factory, had filed a dispute in the Cooperative Court against the factory for recovery of deposit amount, without impleading MCS Bank or Astoria. The Cooperative Court allowed the depositor's claim. The petitioner, as the subsequent owner, challenged the Cooperative Court's order, arguing that the Securitisation Act barred the Cooperative Court's jurisdiction and that the MCS Bank and Astoria were necessary parties.
Procedural Posture: The petitioner filed a writ petition in the High Court of Bombay, Aurangabad Bench, challenging the order of the Cooperative Appellate Court, which had upheld the Cooperative Court's decision in favor of the depositor. Several similar writ petitions were consolidated, and the court considered Writ Petition No. 2746 of 2023 as a representative case.
Issue: Did the Cooperative Court have jurisdiction to entertain the dispute filed by the depositor against the sugar factory, considering the prior initiation of proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, and the non-joinder of necessary parties (MCS Bank and Astoria)?
Holding: No, the Cooperative Court did not have jurisdiction. The High Court allowed the writ petitions, setting aside the Cooperative Appellate Court's order.
Reasoning: The High Court relied on Section 34 of the Securitisation Act, which bars civil courts from entertaining matters that a Debts Recovery Tribunal is empowered to determine under the Act. The Court emphasized that the MCS Bank had initiated action under the Securitisation Act and taken possession of the factory before the depositor filed the dispute. The Court also noted the failure to implead the MCS Bank and Astoria, both necessary parties, in the Cooperative Court proceedings. The Court held that the provisions of the Securitisation Act, being a special enactment, would override the provisions of the Maharashtra Cooperative Societies Act. The Court cited previous judgments, including M/s. Asha Oil Foods Pvt. Ltd. Vs. The Jalgaon Janta Sahakari Bank Ltd. & Ors. and Marathwada Gramin Bank & Ors. Vs. Maharashtra State Co-operative Bank Ltd., to support its view that the Securitisation Act prevails in such situations.
