The Petitioner, a Co-operative Credit Society, challenged the order passed by the Divisional Joint Registrar, Kolhapur, which had set aside the Sale Certificate issued in an auction conducted for recovery of dues against a borrower. The heirs of the borrower, who had passed away before the auction, contested the sale, alleging that the Petitioner proceeded despite knowing of the borrower's death. The High Court allowed the Petition, ruling that the auction and sale certificate were valid, as no substantial evidence of fraud or irregularity was presented by the heirs, nor did they challenge the auction within the prescribed time.

1. Background of the Case:

   • The Petitioner, a Co-operative Credit Society, lent Rs. 2,85,000 to Malgonda Ramgonda Bedkihale on 30th March 2001. The borrower defaulted on the loan.
   • A recovery certificate was issued against the borrower under Section 101 of the Maharashtra Co-operative Societies Act, 1960, and auction of his property was conducted on 16th January 2007.
   • The borrower’s heirs (Respondent Nos. 4 to 7) challenged the sale certificate issued on 21st March 2007.

2. Legal Heirs' Contention:

   • The heirs argued that the borrower died on 9th March 2005, and despite being informed, the Petitioner proceeded with the auction.
   • They claimed non-compliance with Rule 107 of the Maharashtra Co-operative Societies Rules, 1961, and argued that they had offered to pay the auction price along with 5% interest in 2015, which was refused by the Petitioner.

3. Lower Authority's Decisions:

   • The Divisional Joint Registrar initially set aside the Sale Confirmation Certificate and remanded the case for reconsideration, which led to further hearings and a re-issuance of the Sale Certificate.
   • In 2019, the Divisional Joint Registrar again set aside the Sale Certificate, leading to the current Petition.

4. Petitioner's Arguments:

   • The Petitioner contended that there was no fraud involved and the auction sale could not be set aside without a challenge to the auction itself.
   • They argued that the legal heirs failed to challenge the auction sale within the 30-day period prescribed under Rule 107(14).

5. High Court’s Decision:

   • The High Court observed that the legal heirs did not provide any proof of informing the Petitioner about the borrower’s death prior to the auction.
   • The court held that the heirs failed to offer the outstanding dues within the prescribed period and delayed offering payment by almost 7 years.
   • It ruled that the auction sale and subsequent Sale Certificate were conducted as per law, and there was no evidence of fraud or irregularity.
   • The order of the Divisional Joint Registrar was set aside, and the Revision Application filed by the heirs was dismissed.

Acts and Sections Discussed:

1. Maharashtra Co-operative Societies Act, 1960:

   • Section 101: Recovery of loans and issuance of recovery certificates.
   • Section 156: Execution of recovery certificates by attachment and sale of property.

2. Maharashtra Co-operative Societies Rules, 1961:

   • Rule 107: Procedure for attachment and sale of immovable property.
     • Rule 107(13): Provision for setting aside the sale if the borrower or legal heirs deposit the auction price plus 5% interest within 30 days.
     • Rule 107(14): Provision for challenging the auction sale on the grounds of material irregularity, fraud, or mistake.

Ratio Decidendi:

The court held that for an auction sale to be set aside, the legal heirs must establish that there was material irregularity, mistake, or fraud, and must act within the time limits prescribed by Rule 107(13) and (14). In the absence of timely objection or proof of knowledge of the borrower’s death, the sale and sale certificate remain valid. The mere delay in offering payment and failure to challenge the auction within the statutory period precludes setting aside the sale.