Bombay High CourtCAW/2186/2017allowed

Rajaram Foods Private Limited v. Gangapur Shakari Sakhar Karkhana Ltd. And ORS

2017-12-22Hon'Ble Shri Justice A.A. Sayed,Hon'Ble Shri Justice Manish Pitale36 pages

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY

APPELLATE SIDE CIVIL JURISDICTION CIVIL APPLICATION NO. 2186 OF 2017 IN WRIT PETITION NO.10908 OF 2012 ...

Rajaram Foods Private Limited ....Applicant V/S Gangapur Shakari Sakhar Karkhana Ltd. & Ors ....Respondents ...

Ms.Rajni Iyer, Sr. Advocate a/w Mr.Bhavik Manek, Sandeep Bhimekar & Dinesh Parmar i/b Sandeep Bhimekar for the Applicant. Mr.Nitin Thakkar, Sr. Advocate a/w Umesh Shetty i/b Sunil A. Humbre for Respondent No.1.

Mr.Bhushan A Walimbe for Respondent No.2.

Mr.A.B.Vagyani, Government Pleader a/w Mrs.K.R.Kulkarni, Government Pleader for the State.

...

CORAM : A.A. SAYED & MANISH PITALE,JJ.

DATED : 22 December 2017 ORDER: (Per A.A.Sayed, J.) 1.

This Civil Application is filed by the Applicant/Petitioner (hereinafter referred to as "the Petitioner") seeking the following reliefs: "(a) that pending the hearing and final disposal of the Writ Petition Hon'ble Court be pleased to restraint the Respondent No.2 Bank, its officers, servants, agents or any other persons claiming by through or under them by an order and injunction of this Hon'ble Court from in anyway and/or in any manner proceeding with the said property and to restore its possession back; 1/36

2/36 (b) that pending the hearing and final disposal of the Writ Petition the order of the Hon'ble Supreme Court dated 6 February 2017 confirming and continuing the order dated 23 November 2012 passed by this Hon'ble Court shall be maintained; (c) that this Hon'ble Court be pleased to restrain the Respondents by an order of injunction from in any manner alienating, encumbering, parting with the possession of, entering into any agreement, creating any third party rights, dealing with and/or disposing of and/or transferring the rights in respect of the said property in any manner whatsoever;"

On 18 December 2017, during the course of hearing of the Civil Application, certain disconcerting events that had transpired recently (in July 2017) and during the pendency of the present Petition (which was filed in the year 2012) were brought to our notice on which the reliefs sought in the Civil Application are founded, in that, the status quo which was prevailing since the year 2008 has been altered, notwithstanding the order dated 6 February 2017 passed by the Apex Court restoring the adinterim/interim order dated 23-11-2012 of this Court which in turn directed continuation of the of stay granted by the DRAT vide order dated 17-122012 whereby DRAT had stayed the operation of its own judgment and order for six weeks to enable the Petitioner (auction purchaser) to approach this Court. It was brought to our notice that in pursuance of an order dated 2/36

3/36 15 July 2017 passed by the State of Maharashtra under section 79-A of the Maharashtra Co-operative Societies Act, 1960 ('MCS Act' for short) which essentially empowers the State Government to issue orders in public interest, physical possession of the sugar factory (secured asset) which was with the Respondent No. 2 Bank (secured creditor) since 31.10.2008 after having adopted measures under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ('SARFAESI Act' for short) and despite the auction sale of the sugar factory in favour of the Petitioner, has been handed over back to Respondent No. 1 Karkhana (borrower) by the Respondent No. 2 Bank. We therefore directed the Petitioner to add the State of Maharashtra as party Respondent to the Civil Application as we prima facie found that the order dated 15 July 2017 of the State Government dealt with the sugar factory which was the subject matter of the present Petition and Court orders are sought to be overreached. The Civil Application was then adjourned to 21 December 2017.

On 21 December 2017, when the learned Government Pleader appeared, we put it to him whether the State Government would be willing to withdraw its the order dated 15 July 2017. However, the learned Government Pleader submitted that the present proceedings are under the 3/36

4/36 SARFAESI Act and the State Government is not a party to the main Writ Petition and the said order dated 15 July 2017 of the State Government directing the Respondent No.2 Bank to handover physical possession of the sugar factory to the Respondent No. 1 Karkhana is not passed under the SARFAESI Act, but under the MCS Societies Act. He submitted that this is a separate cause of action and the Petitioner is required to take recourse to separate proceedings to challenge the order dated 15 July 2017 passed by the State Government under section 79-A of the MCS Act. He submitted that as stated in the order dated 15 July 2017, the Respondent No.

1 Karkhana was closed and the farmers were not getting the price for their sugarcane due to non-availability of sugar factory in the said region and they are forced to sell their sugarcane to other sugar factories and the farmers are committing suicide due to this fact. Therefore, the said order dated 15 July 2017 came to be passed under section 79-A of the MCS Act in public interest and the said order specifically states that it is subject to Court's decision.

Brief background of the facts as stated in the Civil Application are required to be narrated - the Respondent No.1 Karkhana had availed of certain credit facilities from the Respondent No.2 Bank, which amount was secured by way of mortgage of five properties (secured assets). As the 4/36

5/36 Respondent No.1 Karkhana defaulted, the accounts of Respondent No.1 Karkhana were classified as Non-Performing Assets (NPA). The Respondent No.2 Bank published notice for sale of the secured assets by a public auction. Being aggrieved by the steps taken by the Respondent No.2 Bank, the Respondent No.1 Karkhana filed Securitisation Application No.39 of 2009 before the Debt Recovery Tribunal (DRT), Aurangabad. DRT by its order dated 6 April 2010 dismissed the Securitisation Application No.39 of 2009 and interim orders granted earlier were vacated. Aggrieved by the order dated 6 April 2010 of the DRT, the Respondent No.1 Karkhana preferred an Appeal before the Debt Recovery Appellate Tribunal (DRAT). In the meanwhile, the Respondent No.2 Bank conducted public auction of the secured assets.

The Petitioner along with six other bidders participated in the auction. However, as the bid was below the reserve price, the bidders were permitted to submit the revised bids. The revised bids were also found to be below the reserve price and therefore third opportunity was given to the bidders to submit the bids. On 12 May 2010, the bid submitted by the various bidders were opened and it was found that the Petitioner was the highest and successful bidder having submitted a bid for a sum of Rs.29.01 crores. The sale in favour of the Petitioner was confirmed on 5 June 2010 by the Board of Directors of the Respondent No.2 Bank and the Sale Confirmation letter was issued to the Petitioner.

6/36 sale, the Petitioner deposited 25% of the sale consideration price i.e. Rs.7.25 crores.

According to the Petitioner, before it could deposit the balance 75% of the bid amount in respect of the secured assets, the Respondent No.1 Karkhana filed another Securitisation Application being Securitisation Application No.45 of 2010 before the DRT, Aurangabad challenging the auction sale. An order dated 13 August 2010 came to be passed in Securitisation Application No.45 of 2010 restraining the Respondent No.2 Bank to finalize the sale in favour of the Petitioner until the final disposal of the Securitisation Application. According to the Petitioner, the authorised officer of the Respondent No.2 Bank extended the time for depositing the balance amount until further orders. On 28 February 2011, the DRT, Aurangabad dismissed the Securitisation Application No.45 of 2010 on merits having found no irregularities or illegalities in the action of the Respondent No.2 Bank under the SARFAESI Act.

Aggrieved by that order, the Respondent No.1 Karkhana filed an Appeal being Appeal No.69 of 2011 before the DRAT. On 21 April 2001, in Misc.Application filed by the Respondent No.1 Karkhana, an order was passed by the DRAT directing to maintain status quo with respect to 6/36

7/36 secured assets. According to the Petitioner, the Respondent No.2 Bank granted extension of time to pay the balance consideration within 15 days from the date of disposal of Securitisation Application No.45 of 2010 and Writ Petition. On 17 October 2012, the DRAT passed an order allowing the Appeal and the auction sale in respect of the secured assets in favour of the Petitioner was set aside and liberty was granted to conduct fresh sale in accordance with the rules. This order is the subject matter of challenge in the present Petition. According to the Petitioner, on 23 November 2013 in the present Writ Petition No.10908 of 2012, the Division Bench of this Court was pleased to grant an ad-interim order in favour of the Petitioner, which was continued from time to time.

On 12 August 2016, the Writ Petition was admitted by the Division Bench of this Court. However, the Division Bench refused to continue the ad-interim reliefs. Aggrieved by the order of the Division Bench dated 12 August 2016 refusing to continue the ad-interim relief, the Petitioner preferred Special Leave Petition before the Supreme Court. The Supreme Court was pleased to restore the ad-interim relief dated 23 November 2012 and directed/requested this Court to dispose of the Writ Petition preferably within six months. 7.

It is the case of the Petitioner in Civil Application that somewhere in the last week of July 2017, the Petitioner was shocked and surprised to 7/36

8/36 learn that the Respondent No.2 Bank has handed over possession of the sugar factory to the Respondent No.1 Karkhana despite there being an adinterim order running in favour of the Petitioner. The Advocate for the Petitioner, therefore, addressed a letter dated 4 August 2017 to the Advocate for the Respondent No.2 requesting to inform him about the status of the secured assets. Reminder was sent again on 9 August 2017. By letter dated 10 August 2017, the Advocate for the Respondent No.2 Bank informed the Petitioner's Advocate that the Respondent No.2 Bank has handed over physical possession of the secured assets to the Respondent No.1 Karkhana. The Advocate for the Petitioner, therefore, addressed other letters dated 11 August 2017 and 21 August 2017 calling upon the Respondent No.

2 Bank to furnish copies of the order passed by the Maharashtra Government and undertaking given by the Respondent No.1 Karkhana. According to the Petitioner, the Respondents have committed complete breach of the orders of this Court and the Hon'ble Supreme Court and have in fact committed contempt of court and the Respondents have acted contrary to the order of status-quo passed by the DRAT, which is operating till date and the matter is sub-judice before this Court. The Respondent No.2 has acted with ulterior motive to deprive the Petitioner of the secured assets, which has been lawfully sold by the Respondent No.

9/36 the Respondent No.2 Bank is not in any matter entitled to deal with the secured assets. According to the Petitioner, the order passed by the DRAT has been stayed by this Court and hence the question of Respondent No.2 Bank having any right in the said property in terms of the DRAT order did not arise. It is contended that the Respondent No.2 Bank has colluded with the Respondent No.1 Karkhana and making best possible efforts to wrongly deprive the Petitioner of the legitimate rights in respect of the secured assets and their rights would be seriously affected if the Respondent No.2 Bank is allowed to deal with the secured assets. It is, therefore, prayed in the Civil Application that the possession of the sugar factory be restored. 8.

An Affidavit-in-Reply has been filed by Shri Bapusaheb Murlidhar Patil i/c Managing Director on behalf of the Respondent No.1 Karkhana. It is stated in the Reply that the State of Maharashtra has passed an order dated 15 July 2017 under section 79A of the MCS Act directing the Respondent No.2 Bank to hand over physical possession of the sugar factory to the Respondent No.1 Karkhana in order to prevent farmers' suicides in the area around the Respondent No.1 Karkhana. It is averred that the order dated 15 July 2017 was passed to uphold the public policy of preventing suicides of farmers, which suicides will automatically stop once the Respondent No.1 Karkhana starts its operation. It is contended that the 9/36

10/36 Petitioner ought to have challenged the order dated 15 July 2017 of the State of Maharashtra, which has not been done. According to the Respondent No.1 Karkhana, the stay granted by the DRAT vide the impugned order dated 17 October 2012 was on the fresh auction sale and it was this stay of the fresh auction sale that was extended over a period of time by this Court and the Hon'ble Supreme Court by order dated 6 February 2017. It is asserted that the earlier order of status-quo dated 21 April 2011 was never continued and in any event the said order merged with the final impugned order dated 17 October 2012 of DRAT and all that was stayed was the fresh auction sale ordered therein and it is this stay on the fresh auction sale that has been extended by the Hon'ble Supreme Court by its order dated 6 February 2017.

It is pointed out in the Affidavit in Reply of the Respondent No. 1 Karkhana that the Respondent No. 2 Bank who had earlier challenged the order dated 17 October 2012 of DRAT by filing WP No. 603 of 2013 have withdrawn the said Writ Petition. Physical possession of the sugar factory was taken on 24 July 2017 pursuant to the order dated 15 July 2017 of the State Government and after taking possession, the Respondent No. 1 Karkhana have so far expended an amount of Rs. 36 lakhs on various heads i.e. entire cleaning of the sugar factory, plant and machinery, 10/36

11/36 Distillery, appointment of Security guards, etc. It is stated that in order to enable the mechanics and repairmen to start their work, the Respondent No. 1 Karkhana has to wait for the report of the consultant. It is averred that this sugar factory services the farmers of 224 villages surrounding it. The Respondent No. 1 Karkhana has 14,000 members, all of whom are sugar farmers residing in the 224 surrounding villages who are completely dependent on the Respondent No. 1 Karkhana for their livelihood for their sale of sugar products as there is no other sugar factory in the region.

It is stated that the sugar factory has been lying idle for the last 9 years and the farmers are struggling financially as they are not getting a better price for their sugarcane as they had to sell the same at cheapest rates miles away to other sugar factories and the farmers were left to the mercy of whole sellers and middlemen who are mercilessly exploiting the farmers, forcing them to end their lives. Therefore, the order dated 15 July 2017 was passed by the Government of Maharashtra under section 79A of the MCS Act.

10. The Respondent No. 1 Karkhana has asserted in their Reply that the physical possession of the sugar factory was taken on 31 October 2008 by the Respondent No. 2 Bank illegally and without following due procedure of law and without obtaining an order under section 14 of SARFAESI Act. The sale was confirmed on 28.05.2010 without any notice to the Respondent 11/36

12/36 No. 1 Karkhana and without following the mandatory requirements. Admittedly the balance 75% sale price is not paid till date. The Affidavit in Reply also deals with the merits of the Petition which may not be relevant for the purposes of deciding this Civil Application.

11. Affidavit in Rejoinder has been filed by the Petitioner interalia stating that it is completely false that due to the closure of the sugar factory farmers in that area have committed suicide. It is contended that the entire area where the sugar factory is situated is a fully irrigated land and farmer suicides in an irrigated area is unheard of and it is a misleading and concocted story created by the Respondent No. 1 Karkhana to get away with it under the garb of serious issue of farmers suicides. It is pointed out that the sugarcane prices payable to farmers are decided by Maharashtra Sugarcane Price Control Board (under the Commissioner of Sugar, Maharashtra) which is in addition to the Fair and Remunerative Price decided by the Central Government under the provisions of the Sugarcane (Control) Order, 1966.

It is stated that nothing is brought on record to show any farmers had committed suicide due to the closure of the sugar factory. It is stated that there other 8 sugar mills in the area/region and are named in paragraph 3(a) of the Reply.

13/36 down from 2001-02 season except for season 2006-07 when the sugar factory was given lease and the sugar factory has remained closed for more than 16 years and at no point of time did the Respondent No. 1 Karkhana think of saving the farmers or applying to this Court for taking possession.

12. The Respondent No. 2 Bank has consciously chosen not to file Affidavit in Reply to the Civil Application.

13.

We have heard the learned Senior Counsel for the Petitioner, learned Senior Counsel for the Respondent No.1 Karkhana, the learned Counsel for the Respondent No.2 Bank and the learned Government Pleader on behalf of the Respondent No.4 State of Maharashtra.

14.

Learned Senior Counsel for the Petitioner has invited our attention to the averments in the Civil Application and the various orders passed by DRT, DRAT, this Court and the Hon'ble Apex Court. She submitted that the Respondents have colluded and handed over possession back to the Respondent No. 1 Karkhana in violation of the orders of DRAT, this Court and the Hon'ble Supreme Court. She submitted that the rights of the Petitioner who is the auction purchaser are prejudiced and urged that the possession of the sugar factory is required to be restored forthwith. 13/36

14/36 15.

Learned Senior Counsel for the Respondent No.1 Karkhana has tendered an Additional Affidavit of the Respondent No. 1 Karkhana which interalia states that the Respondent No. 1 Karkhana undertakes to remain in possession of the sugar factory subject to the final result of the Petition. To the said Affidavit is annexed a letter dated 11 September addressed by the Advocate for the Petitioner to the Advocates for the Respondents stating that the present Civil Application be 'tagged' along with the hearing of the Writ Petition on 15 September 2017. We are unable to agree with the contention of the learned Senior Counsel for the Respondent No. 1 Karkhana that this would indicate that even according to the Petitioner there was no urgency in 'hearing' the Civil Application. It is stated in the Additional Affidavit of the Respondent No.

1 Karkhana that in view of the order dated 6 February 2017 of the Apex Court directing that the main Writ Petition be disposed of expeditiously and preferably within 6 months, the Civil Application be heard along with the Writ Petition filed by the Petitioner. The learned Senior Counsel submitted that there is no breach of the orders of DRAT or this Court or the Hon'ble Supreme Court and said orders do not prevent the Respondent No. 2 Bank from handing over possession of the sugar factory back to the Respondent No. 1 Karkhana pursuant to the order dated 15 July 2017 of the State Government under section 79A of the MCS Act which is passed in public interest.

15/36 to the conducting of a fresh auction sale only. He urged that the Civil Application is required to be dismissed.

16. We have given due consideration to the rival contentions. Orders passed by DRT, DRAT, this Court and Apex Court

17. It is at the outset necessary to refer to the various orders passed by DRT, DRAT, this Court and the Hon'ble Supreme Court which arose from the Securitisation Application No. 45 of 2010 filed before the DRT, Aurangabad.

(i) By final judgment and order dated 28.02.2011, DRT rejected the S.A. No. 45 of 2010 filed by the Respondent No. 1 Karkhana challenging the auction sale in favour of the Petitioner. (ii) Aggrieved by the judgment and order dated 28.02.2011, Respondent No. 1 Karkhana preferred Appeal No. 69 of 2011 before the DRAT. (iii)In Misc Application No. No.349 of 2011 in Appeal No.69 of 2011 for waiver of deposit filed by the Respondent No.1 Karkhana, the DRAT passed the following order:

...Keeping into view the amount claimed which is approximately Rs. 60 crores and realization of Rs. 7.50 crores from the sale of securities, the application for waiver is disposed off in the following manner: 15/36

16/36 The appellant is directed to deposit a sum of Rs. 9 crores, out of which a sum of Rs. 4 crores will be deposited on or before 24/5/2011 and the balance amount of Rs. 5 crores will be deposited on or before 23/6/2011 with the Registrar of this Appellant Tribunal, failing which the appeal not be entertainable. As and when the said amount is deposited, it shall be invested.... Stand over to 24/6/2011 for further orders Status-quo shall be maintained in respect of the secured assets meanwhile. In case of default in payment of any of the installments, the interim order shall stand vacated automatically.

(emphasis supplied) (iv)By judgment and order dated 17.10.2012, DRAT allowed Appeal No.69 of 2011 filed by the Respondent No. 1 Karkhana, the operative part whereof reads as under:

ORDER

The appeal is allowed with costs and the judgment and order dated 28-022011 passed by the Ld.P.O. DRT, Aurangabad, in S.A.No.45/2010 is hereby set aside and the S.A. Is allowed. Consequently, the sale in question conducted by the authorized officer of the respondent No.1 bank on the basis of sale notice dated 04-07-2009 read with corrigendum notice dated 19-072009 published in the newspapers is quashed. It is provided that the respondent No.1 bank will be at liberty to proceed with the sale of the immovable mortgaged assets after publishing a fresh sale notice. The sale has to be conducted strictly in accordance with rules 8 and 9 of the Rules.

The ld. Counsel for the respondent No.2 after the judgment and order was delivered, requested to stay the operation of judgment and order, as he 16/36

17/36 wants to approach to the Hon'ble High Court.

The ld. Counsel for the appellant opposed the request. Since the respondent No.2 wants to approach the Hon'ble High Court against the judgment and order passed by this Appellate Tribunal, therefore, it appears proper to stay the operation of this judgment and order for six weeks from today to enable the respondent No.2 to approach the Hon'ble High Court.

Accordingly the operation of this judgment and order will remain stayed for six weeks from today."

(emphasis supplied) (v) Aggrieved by the aforesaid judgment and order dated 17-12-2012 of DRAT, the Petitioner filed the present Writ Petition No. 10908 of 2012 On 23 November 2012, the Division Bench of this Court passed the following order in the present Writ Petition. CORAM : S.J.VAZIFDAR & R.Y.GANOO, JJ.

DATED : 23 rd NOVEMBER, 2012 P.C. :

1. Leave to amend in terms of draft amendment tendered before the Court and marked "X".

2. Amendment to be carried out within one week.

3. Stand over to 6.12.2012.

4. It is stated that the petitioner has been unable to serve respondent no.1 as the Karkhana is closed. In the circumstances, stay granted by order dated 17.10.2012 shall continue till 15.12.2012.

(emphasis supplied) 17/36

18/36 (vi) On 12 August 2016, while admitting the present Writ Petition, the Division Bench of this Court refused to grant interim relief and did not continue the ad-interim relief which was extended from time to time. (vii) Aggrieved by the interim order dated 12 August 2016 of this Court of refusal of interim relief, the Petitioner filed Civil Appeal No. 1489 of 2017 in Special Leave Petition (Civil) No.2910/2017 before the Hon'ble Supreme Court. On 6 February 2017, the Hon'ble Supreme Court passed the following order:

"ORDER

1. As the contesting parties are present we pass final orders in the present Special Leave Petition after granting leave.

2. Looking into the facts of the case and the long continuance of the interim order of the High Court dated 23 November 2012 we are of the view that the High Court ought to have continued the said order until final disposal of the writ petition pending before it. Accordingly, we allow this appeal; set aside the order of the High Court; and restore the interim order of the High Court dated 23 November 2012 with a request to the High Court to hear and decide the matter pending before it as expeditiously as possible, preferably within a period of six months from today.

3. The Appeal is disposed of in the above terms". (emphasis supplied) 18.

We may now analyse the afore-quoted orders - it is not in dispute that the order dated 21.04.2011 was passed by the DRAT in Misc 18/36

19/36 Application No. 349 of 2011 directing that 'status quo shall be maintained in respect of the secured assets meanwhile' and the Misc.Application was adjourned for further orders. In paragraph 16 of the Affidavit in Reply, it is averred by the Respondent No. 1 Karkhana itself that on 17 October 2012, DRAT had passed the final order in Appeal No. 69 of 2011 and with the same order, also disposed of the earlier Misc Application filed by it in which the initial order of status quo was passed.

Therefore, once there was a stay to the operation and implementation of it's own order dated 17 October 2017 passed by DRAT to enable the Petitioner to approach this Court, it would necessarily mean that the position prior to the passing of the impugned order dated 17 October 2017 of DRAT prevailed and consequently the order of status quo also continued to operate. Thus, when this Court vide the ad-interim order dated 23.11.2012 said that the stay granted by order dated 17.10.12 shall continue till 15.12.2012, it would mean that even the order of status quo would continue to operate. It is this ad-interim order dated 23.11.2012 of this Court which has been restored pending the present Writ Petition by the Apex Court vide order dated 6.02.2017 in the Civil Appeal No. 1489 of 2017 by setting aside the order dated 12.08.

2016 of this Court refusing interim relief.

20/36 to the sugar factory (secured asset). We are, therefore, unable to agree with the learned Senior Counsel for the Respondent No. 1 Karkhana that there is no status quo order operating in relation to the sugar factory. As discussed hereinafter, even assuming as suggested on behalf of the Respondent No.1 Kharkhana that the status quo order was not operating, even then, in view of the stay granted by the Apex Court and since the sugar factory is the subject matter of the present Writ Petition and this Court is in seisin of the matter, there was no justification in dealing with the sugar factory and altering the status quo with regard to the sugar factory, in absence of leave being taken from this Court. 19.

While setting aside the auction sale by final judgment and order dated 17.10.2012, the DRAT has stated that the Respondent No. 2 Bank will be at liberty to proceed with the sale of the immovable mortgage assets after publishing a fresh sale notice which will be conducted strictly in accordance with Rules 8 and 9 of the SARFAESI Rules. Nowhere in the order, DRAT has permitted the Respondent No. 2 Bank to handover the sugar factory back to the Respondent No. 1 Karkhana. It is required to be noted that the Securitisation Application No.39 of 2009 preferred by the Respondent No.2 Karkhana challenging the measure under section 13(4) (re taking over possession) has been rejected by the DRT on 6 April 2010 20/36

21/36 and aggrieved by that order the Respondent No. 1 Kharkhana has filed Appeal No. 320 of 2010 before DRAT, which is pending, as admitted by the Respondent No.1 Karkhana in paragraph 12(m) of its Affidavit-in-Reply. It appears that no Application has been made in this Appeal by the Respondent No. 1 Karkhana or Respondent No. 2 Bank to handover possession back to the sugar factory.

20.

In these circumstances, we do not agree with the learned Senior Counsel for the Respondent No. 1 Karkhana that there has been no breach of any orders of the DRAT or this Court or the Apex Court and the stay granted by the Apex Court does not prevent the Respondent No. 2 Bank to handover the sugar factory to the Respondent No. 1 Karkhana as the stay was only restricted to carrying out a fresh auction sale. 21.

We may state here that when we made a query to the learned Sr Counsel for the Respondent No. 1 Karkhana and the learned Counsel for the Respondent No. 2 Bank whether in absence of the order dated 15 July 2017 of the State Government under section 79A of the MCS Act, could the possession of the sugar factory be handed over to the Respondent No. 1 Karkhana, it was fairly stated that in absence of the said order dated 15 July 2017 of the State Government, this could not have been done. In any event, 21/36

22/36 the fact that the Respondent No.1 Karkhana sought an order from the State Government under section 79(A) of the MCS Act, itself indicates that it could not have otherwise taken possession of the sugar factory and what could not have been done directly was done indirectly under cover of the order dated 15 July 2017 of the State Government. Order dated 15 July 2017 of the State Government under section 79A of MCS Act.

22. The order dated 15 July 2017 of the State Government under section 79A of MCA directing the Respondent No.2 Bank to handover possession of the sugar factory to the Respondent No. 1 Karkhana is required to be looked at. It reads thus (English translation): "GOVERNMENT OF MAHARASHTRA Deepak.desai@nic.in Num:SSK-2017/P.K.02/3-S, Co-operative marketing and Textile Division, Madam Cama Marg, Rajguru Hutatma Chawk, Mantralaya, Mumbai - 400 032.

Date: 15th July 2017 The Chairman, Maharashtra State Co-op Bank Ltd, Mumbai.

Sub: Gangapur Sahakari Sakhar Karkhana Ltd., Raghunath Nagar, Gangapur, Dist: Aurangabad to seek possession of the Karkhana from Maharashtra State Co-op Bank Ltd., Mumbai.

22/36

23/36 Ref: Letter dated 22.06.2017 of Chariman, Gangapur Sahakari Sakhar Karkhana Ltd., Raghunath Nagar, Gangapur, Dist: Aurangabad. Respected Sir, With reference to the above, said letter is annexed herewith.

02. Chairman, Gangapur Sahakari Sakhar Karkhana Ltd., Raghunath Nagar, Gnagapur, Dist : Aurangabad, submitted that as the Karkhana (sugar factory) is closed, sugar cane is required to be sold to the factories elsewhere, as suh proper prie is not received for the farmers' produce, the farmers are committing suicides, moreover as the factory is closed, its immovable property is damaged and ruined and therefore the property of the factory is not being properly utilized. If the sugar factory resumes its operation (restarts), then the membershareholders of the area will be able to sell their produce to their rightful factory and to get proper price (rate). Due to earning of proper income, it would become possible to repay the outstanding amount due and payable to MSC Bank in time. Therefore, in the public interest, the Chairman has requested to give Directions under section 79(A) of Maharashtra State Co-operative Societies Act 1960, by the Government to the Maharashtra State Co-op Bank Ltd to return the possession of the property of the factory.

03. In pursuance of the said request, Direction is given under Section 79 (A) ofMaharashtra Co-operative Societies Act, 1960, to give possession of the said factory, in the public interest and subject to Court's decision, to the Chairman, Gangapur Sahakari Karkhana Ltd., Raghunath Nagar, Dist Aurangabad. Yours Sd/- (Deepak S. Desai) Deputy Secretary, Government of Maharashtra Copy to - 1)...

2)...

3)..."

23/36

24/36 From the aforesaid Government dated 15 July 2017, it is apparent that the said order was passed solely upon the basis of the representation/letter dated 22.06.2017 of the Respondent No. 1 Karkhana. Suppression in Affidavit in Reply of the Respondent No. 1 Karkhana 23.

We now examine the Affidavit in Reply filed by the Respondent No.1 Karkhana. We find that the Affidavit in Reply of the Respondent No. 1 Karkhana proceeds on the basis that it is in pursuance of the order dated 15 July 2017 of the State Government that the possession of the sugar factory was handed over to the Respondent No. 1 Karkhana by the Respondent No. 2 Bank. Nowhere in the Affidavit there is a reference to the letter dated 22.06.2017 written by the Chairman of the Respondent No. 1 Bank to the Additional Chief Secretary, Co-operation, Marketing and Textile, Mantralaya, seeking an order under section 79-A of the MCS Act to direct the Respondent No. 2 Bank to immediately handover physical possession of the sugar factory to the Respondent No. 1 Karkhana. This letter dated 22.06.2017 is not annexed to the Affidavit in Reply. It is only when we examined the State Government order dated 15 July 2017 closely, that we found a reference to this letter dated 22.06.2017 and asked to learned Senior Counsel for the Respondent No. 1 Karkhana to produce a copy of 24/36

25/36 this letter dated 22.06.2017, and it came to light that the State Government order dated 15 July 2017 was passed at the instance of the Chairman of the Respondent No.1 Karkhana. Excerpts of the said letter dated 22.06.2017 are reproduced hereinbelow:

"To, The Additional Chief Secretary, Co-operation Marketing and Textile, Mantralay, Mumbai - 400 032.

Your Excellence, Sub: Seeking directions to MSC Bank under Section 79A of Maharashtra Co-operative Societies Act 1960 to handover physical possession of property situated at post: Raghunathanagar, Taluka Gangapur, Dist. Aurangabad, Maharashtra to GSSK --------- Kindly be pleased to direct the MSC Bank to handover physical possession of the Karkhana to Gangapur Sahakari Sakhar Karkhana Ltd and to stop suicide of farmers in Maharashtra.

With great pain we are writing this letter to your good selves to consider the grievances narrated herein below:

We, the Gangapur Sahakari Sakhar Karkhana Ltd (hereinafter referred to as "GSSK" for the sake of brevity) being Co-operative Society registered under the provisions of the Maharashtra Co-operative Societies Act, 1960, involved in business of manufacturing sugar and allied products having a strength of 14,000 members covering 224 villages. The Maharashtra State Co-operative Bank Ltd (herein after referred to as MSC Bank for the sake of brevity) initiated proceedings under the provisions of The Securitisation and Reconstruction of Financlal Assets and Enforcement of Security Interest Act, 2002 as amended up-to-date (hereinafter referred to as SARFAESI Act) against GSSK. 25/36

26/36 GSSK like to narrate a few facts, which are very vital and relevant for the purpose of seeking physical possession of the Karkhana from the MSC Bank, of which physical possession was forcefully taken by MSC Bank without their being any order under section 14 of SARFAESI Act in complete illegal manner and in violation of the provisions of the said Act and Rule made thereunder (a) ....

a) GSSK were required to pay the value of sugarcane so supplied by the farmers in terms of the guidelines provided by the Government from time to time. The said farmers of about 224 villages were thus completely dependent upon GSSK for their livelihood as their no other Karkhana in the said region; ...

(d) However due to political pressure of privatisation of the sugar factories in Maharashtra, many sugar factories were sold by the bank and they were one of the victims of this privatisation;

(e) MSC Bank without there being any order under section 14 of the SARFAESI Act took physical possession of the Karkhana which was in running condition by force in violation of the provisions of the SARFAESI Act and Rules made thereunder on 31st October 2008;

(f) The GSSK challenged the aforesaid illegalities and measures initiated by MSC bank by filing Securitisation Application No. 39 of 2009 before Hon'ble Debts Recovery Tribunal, Aurangabad. However, the Ld. Presiding Officer failed to appreciate the contentions and rejected the Securitisation Application." After making a reference to DRT, DART and the Writ Petition No. 10908 of 2012 (present Writ Petition) and WP No. 603 of 2013 it is stated in the said letter dated 22.06.2017 as follows - 26/36

27/36 "(m) In the meantime, during the pendency of the Writ Petitions, MSC Bank offered One Time Settlement Scheme being Rajya Bank Anutpadit Vargvarimadhir Karjasathi Samopchar Paratphede Yogna 2012 (hereinafter refereed to as "Settlement of Repayment Scheme 2012) to GSSK which was accepted by the GSSK and accordingly as per the terms and condition GSSk deposited 10% amount as required under the said Scheme, which was duly accepted by MSC Bank.

(n) The MSC Bank while accepting the Settlement of Repayment Scheme 2012 put a condition to the GSSK that it shall withdraw the Appeal pending before Hon'ble DRAT, Mumbai, challenging the illegal physical possession and accordingly Appeal was withdrawn on an understanding that MSC Bank will hand over physical possession of Karkhana to GSSK at the time of depositing 15% amount as required under the said scheme 2012. vii) However, the MSC Bank has taken U-turn after withdrawal of proceeding by not handing over the physical possession of Karkhana even when the 15% of the amount was offered by the GSSK as per the agreed terms. viii) The Settlement Scheme which was offered during the pendency of the High Court proceedings and after acceptance of the Rajya Bank Anutpadit Vargvarimadhir Karjasathi Smopchar Paratphed Yojna 2012, MSC Bank has withdrawn the Writ Petition no.603 of 2013.

The Karkhana was in running condition when illegal forceful physical possession was taken by the authorised officer of the MSC Bank on 31 October 2008 and in violation of the provisions of the SARFAESI Act and Rules made thereunder as amended up-to-date. The Karkhana is shut down till date due to act of MSC bank.

It is nothing but the total loss and criminal waste of the secured assets, loss to farmers and loss to nation, due to such conduct of the MSC Bank. The farmers 27/36

28/36 are committing suicide due to lack of work and therefore various farmers of the Karkhana came together to safeguard the said Karkhana and collectively deposited Rs.9.00 Crores as per the direction of the Hon'ble DRAT, Mumbai. ... ...

The farmers are fighting for survival due to non-availability of funds and their own funds are blocked with the Registrar of DRAT, Mumbai due to direction of the DRAT, Mumbai. Further, the farmers not getting better price for their sugarcane and non-availability of the Karkhana in the said region, forcing farmers to sell their sugarcane at cheapest rates miles away in such financial crunch. Due to these circumstances, today the farmers are left at the mercy of whole seller and middlemen who are exploiting the farmers, making the situation worst, forcing farmers to end their lives, which is reflected in the newspapers today. The State Government has to step in to stop the farmers from committing suicide....

If the physical possession of Karkhana is handed over to the GSSK immediately, GSSK would be in a position to re-start the Karkhana and will be in position to take benefit of this season. This in turn will help the farmers to come out of depression and attempt of suicide. The GSSK will definitely be in position to repay the outstanding MSC Bank.

Under the circumstance GSSK humbly prays to your good selves to kindly consider the issue narrated hereinabove and pass necessary directions under section 79(A) of the Maharashtra Co-operative Societies Act, 1960 as amended upto date and to direct the MSC Bank to immediately handover physical possession of the Karkhana to GSSK and safeguard interest of poor farmers. Yours truly, For Gangapur Sahakari Sakhar Karkhana Ltd.

Sd/- Chairman"

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29/36 It is based on the aforesaid self-serving representation/letter dated 22.06.2017 of the Respondent No. 1 Karkhana that the order dated 15 July 2017 was passed by the State Government under section 79A of the MCS Act. We find that in the Affidavit in Reply it is also not disclosed by Respondent No. 1 Karkhana that pursuant to the one time Settlement Scheme of 2012, the proposal of Respondent No.1 Karkhana for one time settlement was accepted by the Respondent No. 2 Bank and that Respondent No.1 Karkhana had also made part payment thereunder and some arrangement was arrived at between the Respondent No. 1 Karkhana and Respondent No. 2 Bank. This fact was also apparently not brought to the notice of the Hon'ble Supreme Court when the order dated 06.02.2017 came to be passed.

24.

Inasmuch as there was an order of status quo operating in relation to the sugar factory, the possession of the sugar factory could not have been given by the Respondent No. 2 Bank, and the Respondent No. 1 Karkhana could not have taken possession of the sugar factory and the possession of the sugar factory by the Respondent No. 1 Karkhana is in breach of the orders of DRAT, this Court and the Hon'ble Supreme Court. Even assuming there was no status quo order operating in relation to the sugar factory as suggested on behalf of the Respondent No. 1 Karkhana, there was certainly 29/36

30/36 a stay operating in relation to the sugar factory. Whether the stay was in relation to conducting a fresh auction sale as sought to be suggested on behalf of the Respondent No. 2 Bank or otherwise, we do not see any propriety in dealing with the sugar factory when the sugar factory is a subject matter of the present Writ Petition before this Court. More so, after the order passed by the Hon'ble Supreme Court on 06.02.2017 interalia directing this Court to hear the Writ Petition preferably within 6 months. We take note that the sugar factory is admittedly closed since the last several years and the Respondents could have certainly awaited the final outcome of the Writ Petition which is to be disposed of expeditiously and in a time bound manner as per the directions of the Hon'ble Supreme Court.

We find that the order dated 15 July 2017 of the State Government under section 79A of the MCS Act ought not to have been made so as to disturb the status quo which was prevailing since the last several years and as the Writ Petition was likely to be heard finally as stated above. We are of the prima facie view that the order dated 15 July 2017 of the State Government dealing with the sugar factory which is the subject matter of the present Writ Petition encroaches upon the exercise of judicial powers of the Court. Nothing prevented the Respondents, including the State Government by way of intervention, from approaching this Court to seek leave to alter the status quo prevailing.

31/36 Respondents is found much wanting. The circuitous and backdoor method employed to take over possession of the sugar factory, despite orders of DRAT, this Court and the Hon'ble Supreme Court and despite the pendency of the present Writ Petition present us reason to believe that the entire exercise is orchestrated by the Respondent No. 1 Karkhana to take over the possession of the sugar factory without seeking orders from this Court. Even assuming that the Respondent No.1 Karkhana may have a good case on merits, it is required to be noted that the Petitioner had succeeded before the DRT and the validity of the judgment and order of DRAT is yet to be tested in the present Writ Petition. When we asked the learned Counsel for the Respondent No.

2 Bank as to why the Bank having confirmed the sale on 05-10-2010 by its Board of Directors, did not approach this Court before handing over possession of the sugar factory to the Respondent No. 1 Karkhana, the learned Counsel informed us that there was a dispute between two MLAs and the Respondent No. 2 Bank is bound by the directions contained in the order dated 15 July 2017 of the State Government. We do not propose to go into the aspect whether there were political considerations or the State Government was misled by the Respondent No. 1 Karkhana or any other reason which led to the passing of the order dated 15 July 2017. We are constrained to observe that the Respondent No.2 Bank has also colluded with the Respondent No.

32/36 Karkhana in handing over the sugar factory back to the Respondent No.1 Karkhana. We do note that the order of the State Government dated 15 July 2017 itself records that the handing over possession of the sugar factory by the Respondent No. 2 Bank to the Respondent No. 1 Karkhana would be subject to the orders passed by this Court. We therefore find that the State Government is well aware that the sugar factory is a subject matter which is being dealt with by this Court in the present Writ Petition. Though in the body of the present Civil Application breach of the Court orders and Contempt is alleged, there is no prayer in the Civil Application seeking Contempt action and we have stopped short of issuing Contempt Notices.

25.

Before concluding, we record our reasons why we are unable to accede to the request made on behalf of the Respondent No. 1 Karkhana to hear the Civil Application along with the Writ Petition which is required to be disposed of expeditiously and in a time bound manner as per the directions of the Hon'ble Supreme Court. Ordinarily, in a given case, we may have acceded to such a request. However, in the facts and circumstances, we feel the conduct of the Respondent No. 1 Kharkhana does not entitle it even to make such request. We find that the possession of the sugar factory has been taken by the Respondent No. 1 Karkhana in violation of the orders of 32/36

33/36 the DRAT, this Court and the Hon'ble Supreme Court and granting of such a request would only mean that the Respondent No. 1 Karkhana would continue to remain in possession of the sugar factory in breach. In our view, the Respondent No. 1 Karkhana is in the first instance required to remedy the wrong and restore the status quo ante, else it would amount to putting a premium on the brazen conduct of the Respondent No. 1 Karkhana. We find substance in the submission of the learned Senior Counsel for the Petitioner that the assertion in the Additional Affidavit to hear the Civil Application along with the hearing of the Writ Petition is merely a design by the Respondent No.

1 Karkhana to continue to remain in possession of the sugar factory and take undue advantage and remain in possession of the sugar factory till the time the matter is ultimately disposed of by the Apex Court after the present Writ Petition is heard and disposed of by this Court after the matter is carried to the Apex Court. In our view, it would be the duty of this Court to first ensure that the status quo ante is restored without delay to preserve the sanctity of orders passed by Courts including the Apex Court. It is admitted by the Respondent No.1 Karkhana in its Affidavit-inReply that the sugar factory even presently is not in working condition .

Apart from the above, we find that when the matter was before the Hon'ble Supreme Court and when the order disposing the SLP was passed as recently as on 6 February 2017 in presence of the Respondent No.

34/36 Karkhana by the Hon'ble Supreme Court restoring the interim relief and directing that the Writ Petition be disposed of preferably within 6 months by this Court, the Respondent No. 1 Karkhana itself could surely have awaited disposal of the present Writ Petition. Instead, the Respondent No. 1 Karkhana moved the State Government by its letter dated 22.06.2017 praying for directions to pass an order under section 79A of MCS Act to direct Respondent No. 2 Bank to handover possession of the sugar factory citing the issue of farmers' suicides and in public interest behind the back of the Petitioner and accordingly the State Government has obligingly passed the order dated 15 July 2017 notwithstanding the pendency of this Petition and the possession of the sugar factory was taken back by the Respondent No.

1 Karkhana on 24 July 2017 (within 9 days). It certainly does not lie in the mouth of the Respondent No. 1 Karkhana to now make a request the since that Petition is to be heard finally as directed by the Hon'ble Supreme Court there is no urgency in hearing the Civil Application and that it should be heard along with the final hearing of the Writ Petition. When the Respondent No.1 Karkhana itself does not find it necessary to await the final hearing of this Writ Petition before taking over possession of the sugar factory it is disentitled to make such a request and is first required to put the clock back and restore the status-quo ante.

35/36 26.

For all the aforesaid reasons, we pass the following order:

O R D E R

(i) The Civil Application is allowed in terms of prayer clause (a); (ii) Physical possession of the sugar factory shall be handed over/taken back by 15 January 2018;

(iii) Compliance Affidavits shall be filed by the aforesaid Respondent No 1 Karkhana and Respondent No. 2 Bank on or before 15 January 2018;

(iv) Unless leave is obtained from this Court by the aforesaid Respondents or the State Government (by seeking intervention) in the present proceedings, the order dated 15 July 2017 of the State Government shall not be acted upon. In the event leave is sought after restoration of possession, such Application will be decided on its own merits without being influenced by the observations in this order; (v) The Civil Application is disposed of accordingly; (vi) List the Petition for directions on 15 January 2018 on the Daily Board for fixing peremptory date of final hearing of the Petition.

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36/36 Learned Counsel for the Respondent No. 1 Karkhana and the learned Government seek stay of the operation of this order. Learned Senior Counsel for the Applicant/Petitioner opposes the grant of stay. We are not inclined to grant stay. In any event, the Respondents have been granted time till 15 January 2018 to implement this order. Hence the request for stay is rejected.

(MANISH PITALE, J.) (A.A. SAYED, J.) 36/36