The Supreme Court has upheld an Allahabad High Court judgment holding that a civil suit seeking redemption of a mortgaged property sold pursuant to an award passed under the Uttar Pradesh Co-operative Societies Act, 1965 is barred under Section 111(d) of the Act, refusing to interfere with the High Court’s interpretation.
A Bench of Justice Dipankar Datta and Justice Sheel Nagu dismissed the Special Leave Petition filed against the Allahabad High Court’s judgment, observing that it was not inclined to interfere with the impugned decision.
The dispute arose after the appellant’s predecessor had mortgaged property as security for a loan advanced by Noida Commercial Co-operative Bank Ltd. to a borrower company. Following default, arbitration proceedings were initiated under the Uttar Pradesh Co-operative Societies Act, culminating in an award permitting the bank to auction the mortgaged property upon failure to repay the outstanding dues.
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After the property was sold through a public auction and a sale deed was executed in favour of the auction purchaser, the appellant first instituted a civil suit challenging the sale deed. Subsequently, a second suit was filed seeking redemption of the mortgage and a declaration that the sale deed executed in favour of the auction purchaser was void.
The Trial Court rejected the plaint under Order VII Rule 11 CPC, holding that the suit was barred by Section 111(d) of the Uttar Pradesh Co-operative Societies Act, 1965, which excludes the jurisdiction of civil courts in respect of awards and orders passed under the Act.
Dismissing the first appeal, the Allahabad High Court held that the relief sought by the appellant could not be granted without effectively setting aside or interfering with the award passed under the Co-operative Societies Act. Since Section 111(d) expressly bars civil courts from questioning such awards, the suit itself was not maintainable.
The High Court also reiterated the settled principle that while deciding an application under Order VII Rule 11 CPC, the Court is required to examine only the averments contained in the plaint. On considering those pleadings, it concluded that the suit was barred by law.
The appellant carried the matter to the Supreme Court. However, the Court declined to interfere with the High Court’s judgment and dismissed the Special Leave Petition, thereby affirming that a civil suit cannot be used to indirectly challenge or nullify a sale effected pursuant to an award under the Uttar Pradesh Co-operative Societies Act.
