M/S. Mukund Cotton Company vs The Managing Director, The Co-Operative Oils Limited

A.N. Venugopala Gowda, J.—Petitioner instituted O.S. No. 149/1994 in the Court of Principal Civil Judge (Sr. Dn.), Raichur against the Co-operative Oils Limited, Gadag, represented by its Managing Director, to pass a decree for realisation of Rs. 2,09,868/- with future interest at 18% per annum, on Rs. 1,34,514 = 54, from the date of suit till realisation. Suit was decreed on 26.03.1997. The said decree was sought to be executed in E.P. No. 303/2000 on the file of Civil Judge (Sr. Dn.) at Raichur. In response to the notice of execution case, the Liquidator of the defendant/Judgment debtor appeared and filed statement of objections dated 27.07.2001. It was contended that defendant/judgment debtor has gone in liquidation and the Deputy Registrar of the Co-operative Societies has been appointed as Liquidator of the society and all assets have been taken over by the Liquidator to dispose off them and pay the debts to the respective creditors as per the priority list approved by the Government and that the decree holder will have to file the claim before the Liquidator and the petition is not maintainable. The execution court, having considered the objections and finding that there is no record to show that the decree holder has obtained leave from the Registrar of Co-operative Societies in terms of Section 118(2) of the Karnataka Co-operative Societies Act, 1959, upheld the objections of the judgment debtors and held that the decree holder cannot proceed with the case by seeking sale of the properties of the judgment debtor. Assailing the said order passed on 06.03.2008, this writ petition has been filed.

Heard Sri. Suresh P. Hudedagaddi, learned advocate for the petitioner and Sri. V.P. Kulkarni, learned advocate for the respondent and perused the writ petition record.

Sri. Suresh P. Hudedagaddi does not dispute the fact that the respondent/Judgment debtor has gone into liquidation and that a Liquidator having been appointed, is in-charge of the assets of the Society. Section 118 of the Act is with regard to the bar of jurisdiction of courts. Sub-section (2) makes it clear that, While a co-operative society is being wound up, no suit or other legal proceedings relating to the business of such society shall be proceeded with, or instituted against, the Liquidator as such or against the society or any member thereof, except by leave of the Registrar and subject to such terms as he may impose.

Undeniably, the decree holder/petitioner has not approached the Registrar in the matter of institution of the suit or execution case to execute the decree passed by the Civil Court and has not obtained the leave. Obtaining of the leave of Registrar in terms of the said provision to proceed against the respondent i.e., for execution of the decree, is mandatory.

In view of the non-production of order granting leave by the Registrar, before the Execution Court, the learned Judge of the Court below is justified in passing the order dated 06.03.2008, upholding the objection of judgment debtor and in holding that the execution case cannot proceed for sale of the properties of judgment debtor which has gone into liquidation. No exception can be taken to the impugned order. However, if leave is granted by the Registrar, by producing the same, petitioner may seek revival of the execution case. Otherwise also, petitioner may approach the Liquidator for settlement of its claim, which shall be considered in accordance with law.

In the result, writ petition being devoid of merit, is dismissed, subject to observations made supra. No costs.