Decided on July 23,1997



M.Srivasan, C.J. - (1.)The petitioner Society took out arbitration proceedings under Section 72 of the Himachal Pradesh Co-operative Societies Act (hereinafter referred to as 'the Act') against the 3rd respondent for recovery of a sum of Rs. 2,32,022.20 said to have been embezzled by him and interest thereon. The arbitrator passed an award for a sum on Rs. 2,16,836.75. After the award was passed, the Society entered into a settlement with the 3rd respondent on his offer to pay a sum of Rs. 55,000/- in cash and furnish sureties for the balance. On that settlement, the Society withdrew the execution proceedings, which it had initiated pursuant to the award. That settlement was arrived at between the parties on 14.11.1981. As per the terms of the settlement, the 3rd respondent was to pay a sum of Rs. 55,00/- by 22nd November 1981. For the balance, he would furnish two sureties who were prepared to mortgage their properties acceptable to the petitioner and liquidate the loan amount within one year in case the 3rd respondent failed to pay off the loan. It was also agreed within case the 3rd respondent or his sureties paid off the balance amount of Rs. 79,511.25 within a period of six months, the petitioner would not charge any interest on the said amount. If on the other hand, the amount was not paid within one year in full, the petitioner would charge interest at the rate of 17 1/2% per annum on the balance amount from 14.11.1981 and enforce the claim.
(2.)The need of mortgage was executed by the 3rd respondent as well as respondents No. 4 to 7 who were the sureties on 30.4.1982. In the preamble, it was stated in the mortgage deed that in consideration of a sum of Rs.79,511.25, the mortgagors did admit, acknowledge and confirm the said amount and they thereby transferred and mortgaged by way of simple mortgage in favour of petitioner herein all the properties specifically described in the Schedule annexed with the mortgage deed. It was also mentioned that items (i), (ii) and (iii) in the Schedule stood attached in favour of the petitioner for a sum of Rs. which had been paid off and Rs. 79.511,25 remained to be paid. The mortgage deed proceeded to say that it was agreed and declared by and between the parties that in case the amount was paid within a period of six months, the petitioner would not charge any interest on the said amount and if the total amount was not paid within one year in full, the petitioner would be charging interest at the rate of 17 1/2% per annum on the remaining amount w.e.f. 14.11.1981. The mortgage deed further stated that it shall be lawful for the mortgagee to enforce the mortgage and to cause the property or any portion sold and appropriate the proceeds to the satisfaction of the mortgagee provided further that in the event of any short fall or deficiency then not satisfied, the mortgagee shall be entitled to recovery the balance personally as against the mortgagors, who shall be entitled to redeem the said mortgage at their option by payment of the amount of mortgage debt inclusive of interest at any time before the date fixed.
(3.)As the terms of the mortgage were not fulfilled by respondents No. 3 to 7, the petitioner initiated proceedings under Section 72 of the Act before the Registrar of the Co-operative Societies. The matter was referred for decision under Section 73(l)(b) of the Act. The Deputy Registrar of Co-operative Societies, who was exercising the powers of the Registrar under Section 72 of the Act rejected the claim holding that as there was already an award passed in arbitration under the provisions of the Act, no further proceedings could be initiated by the petitioner for a second time for passing an award. The petitioner filed a revision before the Joint Registrar (Diary), Co-operative Societies, Himachal Pradesh. The Joint Registrar while setting out the terms of the mortgage opined that the reference made by petitioner was to enforce the mortgage by other means and not to invoke the provisions of Section 72 of the Act. The Joint Registrar observed that in view of the above provision, the applicant Bank shall, approach the competent Court for satisfaction of its claim against the respondent. The application of the Bank for the reasons is, therefore, hereby rejected.

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