HC prohibits auction of property belonging to co-op spinning mills

Source: The Hitavada      Date: 12 Feb 2018 10:18:27


Staff Reporter,

Public land is auctioned to recover public money advanced by MS Co-Op Bank and thus this is a double loss, observed HC while asking Govt to come clean on this issue

Directing the State Government from permitting or confirming any auction of property belonging to any co-operative spinning mill or co-operative unit put to auction to recover government loan, Nagpur bench of Bombay High Court has directed the State Co-Operation Department to file a responsible affidavit within two weeks explaining its policy.

In fact, there were serious allegations in the past about auctioning the movable and immovable properties of the co-operative units situated in various parts of state for a throw-away price and murky details had surfaced about fishy roles played by some directors of State co-operative bank and directors of such co-operative units.

Listing the modus operandi followed during such auctions, the High Court’s order revealed that first State Government allots public land for nominal rate to set-up a co-operative spinning mill. Later State Co-Operative Bank extends huge loan to start the unit for which State Government is invariably a guarantor. After spinning unit fail to run, the State Government decides to recover its dues by putting land to auction. This time in such case pertaining to Sant Gadgebaba Sahkari Sut Girni, Daryapur (which is under liquidation), the State Co-Operative Bank was forced to move the Court to stall the auction to recover its own dues. Looking to this tragi-comic situation, even High Court was forced to observe that “Public money advanced against public property has been lost and to recover it now public property is being put to auction, causing double loss to public revenue.”

If this be the position in case of one cooperative society, this may be the position all over the State of Maharashtra. Thus, for a loan advanced out of public money, a public property is to be sold, resulting in double loss to public revenue, noted a division bench consisting of Justice Bhushan Dharmadhikari and Justice Swapna Joshi while directing the State Co-Operation and Textiles department to file a responsible affidavit explaining policy of Government within next two weeks.

We fail to understand as to why and how Government cannot take back its property, the High Court wondered while noting that the spinning mill had even failed to salary of its employees, who have also intervened in the matter to recover their salary arrears, thus complicating the matter.
However, the restriction on auction of properties belonging to such co-operative units and prohibition shall not apply where there are already orders of the High Court or orders of Apex Court mandating such sale or transfer, the High Court clarified.