Case Note & Summary
The Goa State Cooperative Bank Ltd. appealed against a High Court judgment that declared winding up proceedings of the Goa, Daman and Diu Cooperative Fisheries Federation Limited deemed terminated with retrospective effect from 24.1.1993, thereby halting recovery cases against defaulting members. The Society was registered under the Maharashtra Cooperative Societies Act, 1960, and advanced loans to members for fishing equipment between 1974-1980, funded by the appellant Bank. Due to irregularities, the Registrar ordered winding up in 1985, confirmed in 1986, and appointed successive liquidators, finally the appellant Bank in 1995. The Bank filed 156 recovery cases, reducing outstanding to Rs.56 lacs principal and Rs.154 lacs interest, with 99 appeals pending. In 2001, a defaulting member filed a writ petition seeking declaration that winding up terminated from 24.1.1993. The High Court allowed the petition, holding that under Section 109, liquidation must close within 6 years, extendable by 4 years, and after 10 years deemed termination occurs, leaving no choice but to close proceedings. The Supreme Court examined Section 109 and related provisions. It noted that Section 109(1) provides for deemed termination after 10 years but also empowers the Registrar to call for a report and direct the liquidator to complete unfinished work within one year. Section 109(2) contains a non-obstante clause requiring termination only upon receipt of final report. The Court held that pending recovery proceedings against members are not automatically extinguished; the liquidator retains power to recover dues even after deemed termination. The High Court erred in restraining continuation of recovery proceedings. The appeal was allowed, the impugned judgment set aside, and the Bank permitted to continue recovery proceedings.
Headnote
A) Cooperative Law - Liquidation - Termination of Liquidation Proceedings - Section 109 of the Maharashtra Cooperative Societies Act, 1960 - The issue was whether pending recovery suits against defaulting members automatically close upon deemed termination of liquidation after 10 years. The Supreme Court held that Section 109 does not extinguish pending recovery proceedings; the liquidator continues to have power to recover dues even after termination, and the Registrar may direct completion of unfinished work. (Paras 1, 11-12)
Issue of Consideration
Whether under Section 109 of the Maharashtra Cooperative Societies Act, 1960, on expiry of the period fixed for liquidation, the proceedings for recovery of dues instituted/pending as against the members shall stand closed.
Final Decision
The Supreme Court allowed the appeal, set aside the impugned judgment and order of the High Court dated 29.11.2006, and permitted the appellant Bank to continue recovery proceedings against defaulting members.
Law Points
- Section 109 of the Maharashtra Cooperative Societies Act
- 1960
- termination of liquidation proceedings
- recovery of dues
- deemed termination
- extension of period
- liquidator's powers
