Bombay HC Upholds Special Recovery Officer Order, Quashes Revisional Authority Order”

The Bombay High Court, in a writ petition under Article 227 of the Constitution of India, quashed the order of the Divisional Joint Registrar, Cooperative Societies–2, Mumbai (Revisional Authority) which had set aside an attachment order issued by the Special Recovery Officer under Rule 107(11) of the Maharashtra Cooperative Societies Rules, 1961. The attachment pertained to rights and interests of judgment-debtors under a registered Development Agreement. The Court held that the unilateral cancellation notice by the owners cannot extinguish rights under a registered instrument; the Revisional Authority exceeded jurisdiction by adjudicating civil disputes, and the attachment order by the Special Recovery Officer was lawful and valid.

1. Respondent Nos. 4 and 5 (owners) executed a registered Development Agreement on 18 October 2011 with respondent No. 6 (developer) for Rs. 1.13 crore, granting the developer rights to sell units, collect proceeds, and access the property for development.
2. Petitioner Bank had provided loans to respondent No. 7 (developer) and guarantors (respondent Nos. 8–11). On default, the account was classified as NPA, and recovery proceedings were initiated under Section 101 of the Maharashtra Cooperative Societies Act, 1960.
3. On 7 September 2022, the Special Recovery Officer attached the rights and interests of respondents 7–11 in Plot No. 209-D, Dadar Matunga Estate under Rule 107(11), without affecting the residual ownership of respondents 4 & 5.
4. Respondents 4 & 5 filed an objection under Rule 107(19), claiming the Development Agreement had been canceled by a notice issued by their advocate. The objection was rejected on 18 May 2024.
5. The Divisional Joint Registrar, Cooperative Societies–2 allowed a revision application filed by respondents 4 & 5 on 21 January 2025, setting aside the attachment.

1. Whether the attachment of rights and interests of judgment-debtors under Rule 107(11) was lawful.
2. Whether a unilateral notice issued by the owners can cancel a registered Development Agreement creating proprietary rights.
3. Whether the Revisional Authority exceeded jurisdiction under the Maharashtra Cooperative Societies Act and Rules by adjudicating civil disputes.
4. Whether subsequent events or affidavits can be considered to supplement or alter the reasoning of an administrative order.
5. Whether Rule 107(2) mandates that creditors must first proceed against mortgaged property before attaching other properties.

Petitioner (Bank):

1. Attachment order limited to judgment-debtors’ rights; residual ownership of original owners unaffected.
2. Development Agreement is registered, supported by consideration, and confers enforceable proprietary/commercial rights.
3. Revisional Authority exceeded jurisdiction by adjudicating civil matters.
4. Rule 107(2) is permissive; no mandatory hierarchy for recovery.

Respondents 4 & 5 (Owners):

1. Claimed Development Agreement had been canceled via unilateral notice; attachment invalid.
2. Argued attachment violated Rule 107(2) sequence.
3. Requested remand for reconsideration and to place subsequent events on record.

1. Attachment under Rule 107(11) was restricted to judgment-debtors’ rights; residual ownership of respondents 4 & 5 unaffected.
2. Registered Development Agreement created commercial/proprietary rights; unilateral notice cannot cancel such rights.
3. Revisional Authority exceeded jurisdiction; cannot adjudicate contractual disputes or validity of registered instruments.
4. Rule 107(2) is discretionary; creditor may choose property for recovery.
5. Subsequent events or additional affidavits cannot supplement reasoning of impugned administrative orders (Mohinder Singh Gill, 1978).

1. Impugned order of the Divisional Joint Registrar dated 21 January 2025 is quashed and set aside.
2. Order of the Special Recovery Officer dated 18 May 2024 rejecting the objection of respondents 4 & 5 is restored.
3. Request for remand or stay is rejected.
4. No order as to costs.

1. A registered development agreement creating proprietary or commercial rights cannot be nullified unilaterally; civil court intervention is required for lawful cancellation.
2. Attachment under Rule 107(11) is confined to judgment-debtors’ rights; residual ownership of others is unaffected.
3. Rule 107(2) provides discretion to the creditor; no mandatory procedural hierarchy exists.
4. Revisional authorities have limited jurisdiction; cannot adjudicate civil disputes.
5. Legality of administrative/quasi-judicial orders must be judged on the reasons existing at the time of the order; subsequent events or affidavits cannot cure defects.