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TMI Blog2025 (3) TMI 691X X X X Extracts X X X X X X X X Extracts X X X X ..... im Application - HELD THAT:- It is failed to understand as to how reliance on Clause 11 of the RBI directives assists the case of Savannah. All that Clause 11 provides is that loan transfer would result in transfer of economic interest without being accompanied by any change in underlying terms and conditions of the loan contract and in all cases where there are any modifications in the terms and conditions of the loan contract during or after transfer, the same shall be evaluated against the definition of the term "restructuring" provided in Paragraph No.1 of the Annexure to Reserve Bank of India (Prudential Framework for Resolution of Stressed Assets) Directions, 2019 dated 7 June 2019. Dr. Tulzapurkar has placed on record copy of the said Prudential Directions, 2019 which again does not assist the case of Savannah in any manner. All that Clause 11 provides is that there would be no change in the terms and conditions of loan contract upon transfer of loan and whenever such terms or conditions are modified, the same shall be evaluated against definition of the term 'restructuring' in Prudential Directions. Thus, Prudential Directions apply for limited purpose of definition of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... particular case, to be in violation of a particular Rent Restriction or Control Act, the Court would refuse to record the compromise as it will not be a lawful agreement. If on the other hand, the Court is satisfied on consideration of the terms of the compromise and, if necessary, by considering them in the context of the pleadings and other materials in the case, that the agreement is lawful, as in any other suit, so in an eviction suit, the Court is bound to record the compromise and pass a decree in accordance therewith. Passing a decree for eviction on adjudication of the requisite facts or on their admission in a compromise, either express or implied, is not different.' The Minutes of Order dated 20 October 2022 has a seal of this Court in the form of order dated 21 October 2022. If the compromise is itself unlawful, the seal of this Court put on such compromise must be removed so that no party is permitted to rely on the same in any collateral proceedings by contending that that the compromise has been accepted by the High Court and that the same is therefore valid - the review petition filed by the Shaila Clubs cannot be dismissed by relegating it to remedy of raising ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .
Interim Application filed for seeking condonation of delay in filing Review Petition is allowed - Order dated 21 October 2022 passed in Writ Petition No. 11610 of 2022 in view of Minutes of Order dated 20 October 2022 is recalled - petition restored. X X X X Extracts X X X X X X X X Extracts X X X X ..... (M.C.S. Act, 1960) and filed an application before the Additional Chief Metropolitan Magistrate, Esplanade, Mumbai, seeking physical possession of the Shaila Clubs' land and property. By order dated 22 October 2018, the learned Additional Chief Metropolitan Magistrate allowed the Application preferred by the Bank and authorised the recovery officer to take over possession of the properties of Shaila Clubs under police assistance. Savannah filed Writ Petition No. 14517 of 2018 in this Court challenging the Magistrate's order dated 22 October 2018. By order dated 20 December 2018, this Court granted interim stay to the Magistrate's order on condition of deposit of amount of Rs.50,00,000/- by Savannah. It appears that Savannah filed application bearing C.C. No.1052/MA/2019 before the Chief Metropolitan Magistrate seeking recall of the order dated 22 October 2018. The application was however rejected by the learned Magistrate by order dated 19 June 2019. Savannah filed Writ Petition No. 7542 of 2019 before this Court challenging Magistrate's order dated 19 June 2019. For showing bona fides, Savannah was made by this Court to deposit an amount of Rs. 2 crores. On condition of such depo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lubs to the Bank is Rs. 8,97,73,098/- and that Savannah had already deposited amount of Rs.2,50,00,000/- with the Bank and Savannah offered to pay further amount of Rs. 87,92,000/- to the Bank. Accordingly, Savannah paid amount of Rs. 87,92,000/- to the Bank. Under the Minutes of Order, the Bank assigned the loan amount of Shaila Clubs alongwith all rights, securities, mortgages, charges, remedies and benefits attached thereto in favour of Savannah. The Petition was agreed to be withdrawn under the Minutes of Order. This Court accordingly disposed of Writ Petition No. 11610 of 2022 by taking on record the Minutes of Order dated 20 October 2022 in terms thereof. 7) It appears that the suspended director of Shaila Clubs Mr. Amit Kore complained to the Liquidator vide letter dated 17 November 2022 objecting to assignment of loan of Shaila Clubs to Savannah. The Bank addressed letter dated 17 November 2022 to the Resolution Professional requesting him not to act on the Minutes of Order and asserting that the mortgaged property of Shaila Clubs was still with the Bank. The Bank thereafter wrote to Shaila Clubs on 18 November 2022 referring to the objections of Mr. Amit Kore and stating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vannah vide Minutes of Order dated 20 October 2022 is not lawful. He would submit that the Minutes of Order were filed in completely unrelated proceedings filed by Savannah challenging mere Magistrate's order for recovery of possession of Shaila Clubs property. That Savannah is merely a conducting party in respect of the premises of Shaila Clubs and did not otherwise have any authority to settle the loan account of Shaila Clubs. That under the Minutes of Order, Savannah is shown to have stepped into the shoes of the Bank and became transferee of loan account of the Shaila Clubs by paying paltry sum of Rs. 87,92,000/-. That as on the date of filing of Minutes of Order, the total dues of Shaila Clubs to the Bank were to the tune of Rs. 8,97,73,098/- whereas Savannah paid total amount of Rs. 3,37,92,000/- and has become transferee in respect of the loan account with right to recover the entire loan amount from Savannah by dealing with the mortgaged assets of Shaila Clubs. Mr. Seervai would submit that under the Reserve Bank of India Directives, a private party cannot be permitted to be a transferee in respect of NPA loan account of a Bank. He would rely upon Reserve Bank of India (Tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Goa State Cooperative Bank Limited V/s. Krishna Nath A. (dead) through legal representatives and others (2019) 20 SCC 38. He would submit that Liquidator is yet to submit his final report and therefore its mandate has still not come to an end. He would further submit that Bank's application for recall of order dated 21 October 2022 cannot be dismissed only for the reason of delay in filing the same. He would submit that mere delay, not involving latches, acquiescence or estoppel, would not prevent this Court from exercising inherent power of recalling its order. That inherent power of recall of order need not be conferred and cannot be circumscribed by considerations of delay. In support of his contention, he would rely upon the following judgments: (i) Annada Prasad Mitra V/s. Sushil Kumar Mandal 1941 SCC OnLine Cal 210. (ii) Somar Bhuiya and Ors. V/s. Kapil Kumar Gautam and Ors. 1974 SCC OnLine Pat 95. (iii) Pooranchand Mulchand Jain V/s. Komalchand Beniprasad Jain 1961 SCC OnLine MP 74. (iv) M.M. Thomas V/s. State of Kerala and Another (2000) 1 SCC 666. (v) State of Maharashtra V/s. Digambar (1995) 4 SCC 683. 14) Mr. Seervai would further submit that Savannah has ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... end on 12 February 2022. That therefore, the Liquidator did not have locus standi to file Interim Application No.13400 of 2024 on 21 August 2022. He would rely upon provisions of sub-rule (17) of Rule 89 of the Maharashtra Co-operative Society Rules, 1961 (MCS Rules) in support of his contention that after expiry of period of liquidation, the assets, actionable claims, etc. vests in the Registrar, who can appoint either custodian or receiver to realise the remaining assets and actionable claim. That only custodian or receiver can sue or defend any disputes at the end of liquidation proceedings. He would rely upon judgment of this Court in Ashok Kisanrao Hande and Anr. V/s. The State of Maharashtra and Ors. Writ Petition No.5215 of 2012, decided on 25 March 2019. 18) In support of his contention that the maximum period prescribed under Section 109 of the MCS Act cannot be extended under any circumstances, he would submit that the judgment of the Apex Court in Goa State Cooperative Bank Limited (supra) is clearly distinguishable as the same involved the issue of right of the Bank to continue with recovery proceedings from defaulting members upon completion of period of liquidation. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... settle the loan account. That Savannah has ultimately paid amount of Rs.3,37,92,000/- to the Bank for discharge of liability of Shaila Clubs though Savannah itself did not avail any credit facility from the Bank. That having spent an amount of Rs.3.37 crores, Savannah otherwise is lawfully entitled to recover the said amount from Shaila Clubs through the mortgaged assets. Dr. Tulzapurkar would submit that since there is no illegality in the compromise, the application for recall as well as review of order dated 21 October 2022 deserve to be dismissed. He would submit that interim application for recall as well as review petition of suspended director of Shaila Clubs otherwise suffer from gross delay and on that ground alone, they are liable to be dismissed. 22) In rejoinder, Mr. Seervai would submit that admittedly in the present case, no formal order is passed as mandated under Section 109 of the MCS Act by Registrar for termination of liquidation proceedings and discharging the Liquidator. That the Liquidator therefore continues to be incharge of the Bank. That the liquidator has various statutory and other duties qua the Applicant as set out in Section 105 of the MCS Act. He w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecord and marked "X-1" for identification. 2. Parties are identified by their respective Advocates. In terms of the Minutes of Order, respondent no.2 has agreed to issue "No-Dues Certificate" to the petitioner. In view of this, nothing survives in the petition. The petition is disposed of in terms of the Minutes of Order. 3. Leave to amend. Amendment to be carried out forthwith. 26) Since Writ Petition No. 11610 of 2022 is disposed of in terms of Minutes of Order dated 20 October 2022, it would be apposite to reproduce the said Minutes as well- MINUTES OF ORDER 1. The Petitioner and Respondent No. 1 and 2 have settled their disputes out of Court. 2. By an order dated 28th of July 2022, the learned Deputy Registrar (Ur- ban Banks), Cooperative Societies, Maharashtra State, Pune, has extended the application of the One Time Settlement Scheme dated 6th of June 2022 to the Respondent No. 2 Bank. Accordingly, among other defaulters, Respondent No. 2 has offered the benefits of the same to Respondent No. 3 as also to the Petitioner since the Petitioner is in possession of the Premises. As against the actual dues of INR 8,97,73,098/- as of today, after the credit of INR. 2,50,00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at Bandra. The learned Magistrate allowed the application filed by the Bank and authorised recovery officer to take possession of Shaila Clubs' property at Bandra vide Order dated 22 October 2018. Savannah, who initially filed Writ Petition No. 14517 of 2018 in this Court for stalling recovery of Shaila Clubs' property, later filed application before the learned Magistrate seeking recall of Order dated 22 October 2018. After its recall application was rejected by the learned Magistrate by order dated 19 June 2019, Savannah filed Writ Petition No. 7542 of 2019 in this Court and deposited amount of Rs.2,00,00,000/- with the Liquidator. Earlier Savannah had deposited amount of Rs. 50,00,000/- in Writ Petition No. 14517 of 2018. This is how Savannah deposited total amount of Rs.2.50 crores with the Liquidator for the purpose of protecting its possession of Shaila Clubs' property. 28) As observed above, Savannah is not the owner of Shaila Clubs' property but was armed with merely a Conducting Agreement executed in its favour by Shaila Clubs and had right to manage Shaila Clubs' property for 15 years upto November 2022. For protecting property of the Club under its management, Savannah ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #2352;तफेडीबाबत... उपरोक्त विषयास अनुसरून आपणास कळविण्यात येते की, आमचे बँकेने शाखा ना. म. जोशी मार्ग, मुंबई येथून कर्जदार मे. शैला क्लब् अँड रिसॉर्ट प्रा. लि. यांना व्यवसायासाठी तारणी मध्यम मुदत कर्ज रक्कम रू.४,७५ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2366;र्टी करून मे. हाय कोर्ट मुंबई येथे आपण दावा दाखल केलेला आहे. या दाव्यातील निकालाप्रमाणे आपण वेळोवेळी मे. शैला क्लब अँड रिसॉर्ट प्रा.लि यांचे बँकेच्या कर्जखातेवर जवळपास रू.२.५० कोटी इतकी रक्कम जमा केलेली आ& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... आहेत. ठेवीदारांची ठेव रक्कम लवकरात लवकर परत करणे आवश्यक आहे. त्यामुळे आपण कर्जदाराच्या वतीने रक्कम जमा करून कर्जखाते निरंक करावे. टिप :- यापुर्वी आपण कोर्ट आदेशाप्रमाणे कर्जखातेवर रक्कम जमा केली असलेने ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usand three hundred fifty only) can be deposited on behalf of the borrower in its bank account of M/s. Shaila Club & Resorts Pvt. Ltd. 13 years have completed for the bank going into liquidation. It is necessary to return the amount of depositors as early as possible. Therefore, by depositing the amount on behalf of the borrower, clear the loan account. PS: As you have earlier deposited the amount on the loan account as per the order of the court, you are being given this request letter. This letter should not be taken as legal in nature. Sd/- Mrs. Smruti Patil Liquidator Vasantdada Shetkari Sahakari Bank Ltd, Sangli 30) Savannah expressed willingness to pay amount of Rs. 77,16,350/- suggested by the Liquidator but did not agree for closure of the loan account. Savannah instead requested the Bank to assign loan with all securities, rights and benefits to it. The counter offer made by Savannah reads thus: Date: 11/08/2022 To. The Official Liquidator Vasantdada Shetkari Sahakari Bank, Sangli Miraj Road, Sangli-416 416 Email: [email protected] Kind Attn: Ms. Smruti Patil (Liquidator) Dear Madam, Sub.: Reply to your letter dated 6th August 2022 addre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt due to your Bank, a Recovery Certificate came to be is- sued on 23rd February 2012 by the Deputy Registrar, Co-operative Societies, State of Maharashtra, against Shaila Clubs and Resorts Private Limited for an amount of INR 5,11,51,489 (Indian Rupees Five Crores Eleven Lakhs Fifty-One Thousand Four Hundred Eighty-Nine) under which your Bank was entitled to execute the Recovery Certificate and recover its outstanding dues from Shaila Clubs and Resorts Private Limited. We request you to kindly cooper- ate in executing necessary documents or making an application to the relevant authorities for transfer of the said Recovery Certificate in favour of Savannah Lifestyle or the said third party along with the charge on the club premises. 6. We can also file Consent Terms in Writ Petition No. 5289 of 2020 which has been filed by Savannah Lifestyle Private Limited, before the Hon'ble Bombay High Court. 7. Awaiting your confirmation of the aforesaid, we shall proceed with depositing the said amount with your Bank by way of Demand Draft as per the offer made by your Bank vide letter dated 06/08/2022 in the said letter. Sincerely, Savannah Lifestyle Private Limited Managing Direc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is the "Borrower" under the loan documents and the erstwhile directors who are the Guarantor/s of the loan availed from Bank. It has now been brought to our notice, vide the captioned Intervention Application, that the OTS has been concluded with Savannah Lifestyle Private Limited ("Savannah Lifestyle"), a third party who has absolutely nothing to do with the loan availed of by Shaila Clubs. As you are well aware, the Company, i.e. Shaila Clubs, despite being a necessary party, was not even a party to the proceedings in the Bombay High Court. 3. In fact, it is due to Savanna Lifestyle defaulting on its obligations under its Conducting Agreement with Shaila Clubs, and their illegal occupation of the Shaila Clubs' property, that Shaila Clubs' account has become an NPA. You are well aware of the aforesaid, given the fact that Shaila Clubs, as well as the Bank, have had several litigations with Savannah Lifestyle over the past 15 years and against whom there is an FIR registered for forgery of a document for gaining illegal admission into the Committee of Creditors. 4. Given the above, the erstwhile Directors of Shaila Clubs have been constrained to take several steps in law in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Bank decided to resile from the compromise executed with Savannah and sent letter dated 18 November 2022 to the Managing Director of Savannah which reads thus: जावक क्र. : जा.क्र.व्हीएसएसबी / वसुली विभाग/२०२२-२३/५८/१८२ दिनांक : १८/११/२०२२ प्रति, मा. मॅनेजिंग डायरेक्टर, ने. सावनाह लाईफस्टाईल प्रा.लि.. १६४ हिल रोड, बांद्रा (पश्चिम), मुंबई - ४०० ०५० &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6;रंतु, मे.शैला क्लब अँड रिसॉर्टस् प्रा.लि. हे बँकेकडील मुळ कर्ज खाते आहे व त्याचे संचालक अमित प्रभाकर कोरे यांनी दि. १७/११/२०२२ रोजी बँकेकडे सदर कर्जखातेबाबत हरकत नोदविली आहे. श्री. अमित कोरे यांनी घेतलेल्या & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 354;ा क्लब अँड रिसॉर्टस् प्रा.लि. यांचे कर्जासाठीची OTS ची रक्कम बैंक आपले कंपनीचे नांवाने स्टेट बैंक ऑफ इंडीया, मुंबई वरील DD No.119938 र.रू.७७.१६.३५०/- ने व DD No.119937 ८.रू.१०,७५,०००/- व DD No.119936 रू. ६५०/- अशी एकूण र.रू.८७,९२,०००/- (अक्षरी र.रू. सत्याऐं ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0/- for the settlement of the loan account of the Respondent No. 3. The Respondent No. 1 accepted the said offer of the Petitioner and entered consent terms, based thereon, in the present Writ Petition. I crave leave to refer to and rely upon the correct copy of the said consent terms and the order of this Hon'ble Court dated 21 of October 2022 as and when necessary. 5. I say that after the disposal of the present Writ Petition as aforesaid, the Respondent No. 3 has objected to the acceptance of the offer of the Petitioner to settle its loan account by letter dated 17 of November 2022. Hereto annexed and marked as Annexure A - 1 is the copy of the said letter dated 17 of November 2022. 6. After examination of the objections/letter dated 17 of November 2022, issued by the Respondent No. 3, the provisions of the law and after examining the file in that context, I have come to a conclusion that the decision to offer the benefit of the OTS Scheme to the Petitioner was itself incorrect and thus the decision to enter consent terms as aforesaid was also incorrect. 7. I say that I have decided to recall the benefits of the OTS Scheme to the Petitioner as aforesaid by Resolution No. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by a lawful agreement or compromise in writing and signed by the parties. Thus, for compromise of a suit under provisions of Order XXIII Rule 3 of the Code, the agreement or compromise must be lawful. It is Bank's contention that the transaction of assignment of Shaila Clubs' loan to Savannah is unlawful and is prohibited by the RBI Directives. 37) Sections 21 of the Banking Regulation Act, 1949 (Act of 1949) confers power on the Reserve Bank of India to control advances by the banking companies and provides thus: 21. Power of Reserve Bank to control advances by banking companies.- (1) Where the Reserve Bank is satisfied that it is necessary or expedient in the public interest [or in the interests of depositors] [or banking policy] so to do, it may determine the policy in relation to advances to be followed by banking companies generally or by any banking company in particular, and when the policy has been so determined, all banking companies or the banking company concerned, as the case may be, shall be bound to follow the policy as so determined. (2) Without prejudice to the generality of the power vested in the Reserve Bank under sub-section (1), the Reserve Bank may g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect. 40) In exercise of powers under Sections 21 and 35A of the Act of 1949, RBI issued 'Master Directions-Reserve Bank of India (Transfer of Loan Exposure) Directions, 2021' on 24 September 2021. Under Clause 3 of the Directives, the same applies to various entities enumerated therein, which are collectively referred to as 'lenders' throughout the Directives. Clause 3 of the Directives provides thus: 3. The provisions of these directions shall apply to the following entities (collectively referred to as lenders in these directions), unless specified otherwise: (a) Scheduled Commercial Banks; (b) Regional Rural Banks; (c) Primary (Urban) Co-operative Banks/State Co-operative Banks/ Central Co-operative Banks; (d) All India Financial Institutions (NABARD, NHB, EXIM Bank, SIDBI and NaBFID); (e) Small Finance Banks; and (f) All Non Banking Finance Companies (NBFCs) including Housing Finance Companies (HFCs). 41) Clause 9 of the Directives define various terms and expressions and the term 'permitted transferees' has been defined under Clause 9(h) as under: (h) "Permitted transferees" mean the lenders specified at sub-clauses (a), (d), (e) and (f) of Clause 3: 42) The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s defined under Clause 9 (k) as under: (k) "stressed loans" mean loan exposures that are classified as non- performing assets (NPA) or as special mention accounts (SMA); 46) Thus, under the Directives 2021 issued by the RBI, it was impermissible for the Applicant-Bank to transfer the loan of Shaila Clubs to any entity other than the ones enumerated in sub-clauses (a), (d), (e) and (f) of Clause 3. This is the reason why the Applicant-Bank as well as Shaila Clubs contend that the compromise entered into between the Bank and the Savannah is in violation of the RBI Directives and the same is therefore unlawful. 47) Dr. Tulzapurkar has fairly not disputed the position that the 2021 Directives are applicable in respect of the Applicant-Bank and that Savannah is not included as a recognized 'lender' under Clause 3 of the Directives. Dr. Tulzapurkar has also fairly not disputed the position that the RBI Directives issued under provisions of Sections 21 and 35A of the Act of 1949 are binding and therefore, it is not necessary to increase the length of this judgment by discussing the ratio of judgment in Sudhir Shantilal Mehta (supra) which reiterates the position that RBI Directives ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Prudential Directions, 2019 which again does not assist the case of Savannah in any manner. All that Clause 11 provides is that there would be no change in the terms and conditions of loan contract upon transfer of loan and whenever such terms or conditions are modified, the same shall be evaluated against definition of the term 'restructuring' in Prudential Directions. Thus, Prudential Directions apply for limited purpose of definition of the term 'restructuring' that too when there are modification of terms and conditions in loan agreement. 51) I am therefore of the view that the transaction of assignment of loan of Shaila Clubs by the Bank in favour of Savannah is specifically prohibited under the 2021 RBI Directives as Savannah is not an eligible transferee. One of the objectives behind the RBI Directives is to ensure that the Banks do not transfer loan accounts to ineligible transferees. Otherwise, Banks would transfer loan accounts to private money lenders. Since Savannah is not one of the recognized transferees under the 2021 RBI guidelines, transfer of loan account of Shaila Clubs in favour of Savannah would clearly be unlawful. Therefore, the compromise entered into betwe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. Dalpatram Ichharam alias Brijram [(1974) 1 SCC 242 : (1974) 2 SCR 544] - a judgment which is noticed by the High Court also in its order under appeal and the case of Roshan Lal v. Madan Lal [(1975) 2 SCC 785 : (1976) 1 SCR 878] . 3. It was pointed out in Nagindas case by one of us (Sarkaria, J.) that the existence of one of the statutory grounds mentioned in Sections 12 and 13 of the Act, as in the case of other similar States Statutes, is a sine qua non to the exercise of jurisdiction by the Rent Court in order to enable it to make a decree for eviction. Parties by their consent cannot confer jurisdiction on the Rent Court to do something which according to the legislative mandate it could not do. The Court while recording a compromise under Order 23 Rule 3 of the Code has to satisfy itself that the agreement between the parties is lawful; in other words is not contrary to the provisions of the Act. But it has been clearly laid down in Nagindas case at p. 552 (SCC p. 251-52): "... that if at the time of the passing of the decree, there was some material before the Court, on the basis of which, the Court could be prima facie satisfied, about the existence of a statutory grou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , we deal with the concept of "Minutes of Order", which is peculiar only to the Bombay High Court. This Court, in the case of Speed Ways Picture Pvt. Ltd. v. Union of India1 had an occasion to consider the practice of passing orders in terms of "Minutes of Order". Paragraphs 5 and 6 of the said decision reads thus: "5. The basis upon which the review petition was decided is, in our view, not correct. Counsel for the appellants and the respondents put it in writing that a judgment of this Court and a Full Bench judgment of the High Court covered the matter. The writ petition in that High Court could, therefore, not succeed. This could have been orally stated and recorded by the Court. As a courtesy to the Court, the practice of long standing is to put statements such as these in writing in the form of "minutes of order" which are tendered and on the basis of which the Court passes the order: "Order in terms of minutes". The signatures of counsel upon "minutes of order" are intended for identification so as to make the order binding upon the parties' counsel represented. An order in terms of minutes is an order in invitum, not a consent order. It is appealable and may be review ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their respective clients after that. 19. Even if parties file consent terms, while accepting the consent terms in terms of Rule 3 of Order XXIII of the Civil Procedure Code, 1908, the Court is duty-bound to look into the legality of the compromise. The Court has the jurisdiction to decline to pass a consent order if the same is tainted with illegality. However, an order passed by the Court in terms of compromise recorded in the consent terms is a consent order which will not bind the persons who were not parties to the consent terms unless they were claiming through any of the parties to the consent terms. 20. We summarise our conclusions regarding the concept of the "Minutes of Order" as follows: a) The practice of filing "Minutes of Order" prevails in the Bombay High Court. As a courtesy to the Court, the advocates appearing for the parties to the proceedings tender "Minutes of Order" containing what could be recorded by the Court in its order. The object is to assist the Court; b) An order passed in terms of the "Minutes of Order" tendered on record by the advocates representing the parties to the proceedings is not a consent order. It is an order in invitum for all pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been disposed of by settling the loan account of Shaila Clubs with a third party viz. Savannah. It was therefore otherwise questionable whether the loan account of Shaila Clubs could have been settled in the light of issue involved in the Writ Petition No. 11610 of 2022. But in any case, such settlement of loan account can never be without the consent of Shaila Clubs. 58) It sought to be contended by Dr. Tulzapurkar that as far as the Bank and Savannah are concerned, the compromise is lawful as the Bank itself walked up to Savannah with an offer to settle the loan account of Shaila Clubs under OTS for an amount of Rs. 77,16,350/-. It is suggested that so far as the Bank is concerned, the compromise is lawful as the Bank always intended to close Shaila Clubs' loan account upon acceptance of ascertained amount of Rs. 77,16,350/- under the OTS. It is contended that the Liquidator had all the powers to ascertain the figure at which Shaila Clubs' loan account could be settled under the OTS and the Bank has taken independent commercial decision of closing the loan account of Shaila Clubs by accepting the amount of Rs. 77,16,350/-, in addition to the amount of Rs.2.50 crores already ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y or control of all the property, effects and actionable claims to which the society is or appears to be entitled and of all books, records and other documents pertaining to the business of the society, under sub-section (2) of section 103), unless the period is extended by the Registrar or the Government: Provided that, the Registrar shall not grant any extension for a period exceeding one year at a time and four years in the aggregate: Provided further that, if it is necessary to grant further extension beyond ten years, the Registrar shall send proposal for such extension to the Government. The Government may grant extension for a period not exceeding one year at a time and five years in the aggregate: Provided also that, immediately, after the expiry of fifteen years from the date aforesaid, it shall be deemed that the liquidation proceedings have been terminated and the Registrar shall pass an order of terminating the liquidation proceedings: Explanation.- In the case of a society which is under liquidation at the commencement of the Maharashtra Co-operative Societies (Second Amendment) Act, 1985 the period of six years shall be deemed to have commenced from the date o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ake such further action as he is empowered to take under the Act. All liabilities recorded in the account books of the society shall be deemed ipso facto to have been duly notified to the Liquidator under this rule. (5) The Liquidator shall, after settling the assets and liabilities of the society as they stood on the date on which the order for winding up is made, proceed to determine the contribution to be made or remaining to be made to the assets of the society by persons and estates referred to in clause (h) of Section 105 and by order call upon each of them to pay the amount specified in the order as contribution and as costs of the liquidation determined under clause (k) of Section 105. Every such order shall be submitted for approval to the Registrar, who may modify it or refer it back to the Liquidator for further inquiry or other action or may forward it for execution under Section 98. (6) If the sum assessed against any member is not recovered, the Liquidator may issue subsidiary order or orders against any other member or members to the extent of the liability of each for the debts of the society until the whole amount due from members is recovered. The provisions o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould be utilised. (18) At the conclusion of the liquidation proceedings, unrealized assets and unrealized actionable claims, if any shall vest in the Registrar, who may appoint a custodian or receiver, to realize such remaining assets and actionable claims as above and credit the same to the surplus. A custodian or receiver may sue or defend any disputes arising out of such proceedings thereunder: Provided that, unrealized actionable claims shall be realized by the Registrar or custodian as the case may be and expenditure incurred for realization if any may be met out of the surplus kept at his disposal. (emphasis added) 61) The maximum permissible period for liquidation of 15 years is prescribed under Section 109 of the MCS Act. In the present case, the Applicant-Bank has been under liquidation since 7 January 2009 and it is contended by Savannah that the liquidation proceedings can continue only until 12 February 2024, whereas the present application is filed on 21 August 2024 after the date of deemed termination of the liquidation proceedings. It is therefore contended that the Liquidator did not have authority to file the application after termination of the liquidation p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r comes to a conclusion that the work of liquidation could not be completed by the Liquidator due to the reasons beyond his control, he shall call upon the Liquidator to submit his report. After getting the report, if the Registrar is satisfied that the realisation of assets, properties, sale of properties still remains to be realised, he shall direct the Liquidator to complete the entire work and carry out the activities only for the purposes of winding up and submit his report within such period not exceeding one year reckoned from the date of receipt of the report from the Liquidator. 21. It is apparent that on the termination of the liquidation proceedings, liability of the members for the debts taken by them does not come to an end. There is no such provision in the Act providing once winding-up period is over, the liability of the members for loans obtained by them which is in their hands, and for which recovery proceedings are pending shall come to an end. No automatic termination of recovery proceedings against the members is contemplated. On the other hand, on completion of the period fixed to liquidate the Society, final report has to be submitted as to the amount stand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court to file appropriate affidavit in WP No.315/12 pointing out the rejection of extension for liquidation. In the present proceedings we are only considering the question of extension of liquidation proceedings and we are not deciding any question related to the premises which are in possession of the liquidator. 17. As can be seen, the said section provides that, including extensions, the winding up proceedings cannot be extended beyond the period of 10 years, from the date on which, the liquidator took over custody of the said bank. The period provided under the said section is mandatory and cannot be extended in any circumstances. This view is expressed by a Division Bench of this Court at Nagpur in the judgment dated 15/12/2009 in WP No. 1625/06 in the case of Dr. Raju @ Ramchandra Narendra Deoghare Vs. Government of India and others. Paragraph No. 46 of the said judgment reads thus; "In our considered opinion, the ratio laid down in the above referred judgment of the Madhya Pradesh High Court, which was delivered after considering the Apex Court judgment is squarely applicable in the present case. The language of Section 157 of the Act is clear and unambiguous. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation No.13400 of 2024 and in filing the two Review Petitions, it is well settled position of law that mere delay, not involving latches, acquiescence or estoppel, would not prevent this Court from exercising inherent power of recalling its order. The inherent power of this Court in recalling an order is not circumscribed by considerations of delay. Once this Court arrives at a conclusion the compromise is unlawful and could not have been acted upon by this Court, mere delay would not be a hurdle for this Court to recall and/review the recording of unlawful compromise. Reliance by Mr. Seervai on judgments in Annada Prasad Mitra, Somar Bhuiya, Pooranchand Mulchand Jain, M.M. Thomas and State of Maharashtra V/s. Digambar (supra) in this regard is apposite. Once this Court arrives at a conclusion that the compromise itself is unlawful, mere delay in filing applications for recall or review cannot be a reason for shutting the doors of this Court on technical ground of delay. I am therefore not discussing the ratio of various judgments relied upon by Mr. Seervai on the proposition of mere delay not coming in the way of the Court setting aside an obvious error. I am inclined to allow In ..... X X X X Extracts X X X X X X X X Extracts X X X X
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